Sweet Baby Back Ribs BBQ Company's business analysts want to estimate profit for the incoming year....
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Sweet Baby Back Ribs BBQ Company's business analysts want to estimate profit for the incoming year. They know the decision on the dollar amounts of Marketing Budget will influence the Market Size in a positive way and decision on the dollar amount of the Marketing Budget and the Product Price will impact their Market Share. They also know their sales amount depends on the market size and their market share. It is also well known in business that the total cost is calculated by adding production cost to the total fixed cost. Below are how these two costs are calculated. a. Production cost which is estimated by sales amount multiplied by unit cost b. Total Fixed cost includes Marketing budget and is independent of the production. Estimated revenue is calculated based on product price multiplied by sales amount. Finally, profit is calculated by subtracting total cost from revenue. 1. Identify decision, intermediate, fixed, and objective variables. 2. Draw the influence chart (diagram) for the above process. 3. Put this model in a spreadsheet with the following values. How much is the profit? a. Marketing budget $6,000,000 b. Unit cost $100 C. Unit Price $500 d. Market Size 2,000,000 e. Market Share 100,000 f. Sales amount is equal to (1.5% of Market Size) + Market Share g. Total Fixed cost is equal to Marketing Budget plus $2,000,000 h. Production cost is equal to unit cost multiplied by Sales amount. 4. Implement decision-making process phases. Identify "evaluating solutions" and "implementing a solution" phase activities. What is the total profit? Sweet Baby Back Ribs BBQ Company's business analysts want to estimate profit for the incoming year. They know the decision on the dollar amounts of Marketing Budget will influence the Market Size in a positive way and decision on the dollar amount of the Marketing Budget and the Product Price will impact their Market Share. They also know their sales amount depends on the market size and their market share. It is also well known in business that the total cost is calculated by adding production cost to the total fixed cost. Below are how these two costs are calculated. a. Production cost which is estimated by sales amount multiplied by unit cost b. Total Fixed cost includes Marketing budget and is independent of the production. Estimated revenue is calculated based on product price multiplied by sales amount. Finally, profit is calculated by subtracting total cost from revenue. 1. Identify decision, intermediate, fixed, and objective variables. 2. Draw the influence chart (diagram) for the above process. 3. Put this model in a spreadsheet with the following values. How much is the profit? a. Marketing budget $6,000,000 b. Unit cost $100 C. Unit Price $500 d. Market Size 2,000,000 e. Market Share 100,000 f. Sales amount is equal to (1.5% of Market Size) + Market Share g. Total Fixed cost is equal to Marketing Budget plus $2,000,000 h. Production cost is equal to unit cost multiplied by Sales amount. 4. Implement decision-making process phases. Identify "evaluating solutions" and "implementing a solution" phase activities. What is the total profit?
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1 Types of variables decision variables intermediate variables fixed variables and objective variables Decision Variables Marketing Budget Product Pri... View the full answer
Related Book For
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey
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