2 PART B: Oakwell Health & Wellness Consulting Cheryl was very happy with your deliverable from last week and has brought you back for a separate consulting engagement. You sit back down in her office to see what this engagement will entail and she calls in her manufacturing manager to speak with you as well. The manufacturing manager, Florie, has asked you to help determine which product they should introduce next into their product mix. They have two options: Option 1: SuperFood Smoothie Powder A new and improved smoothie powder with enhanced ingredients such as fish oil and flaxseed! Florie explains to you that they would likely sell this product for $118/unit and they expect to sell anywhere between 1500 - 1800 units in the first year. Materials such as the ingredients, etc.. are budgeted to cost $65/unit, and it will cost $30/unit to pay employees for this new product. On top of that, rent associated with the new warehouse to produce this item would be $20,000 for the year. Lastly, a new investment in machinery would be required. Florie estimates that this investment would be $19,000. Florie is excited to say that they already have customers lined up! Sounds like demand for this product is on the high end of their expectations. Option 2: Protein Cookie Dough Florie noted that she has seem a demand in the market for protein-filled desserts. Their protein cookie dough achieves exactly that! Coming in many different flavours, this new product is budgeted to sell at $95/tub. Florie mentions to you that they estimate that they can sell anywhere between 1900-2100 tubs per year, and that rent is only $18,000 per year. The equipment investment would be approximately $11,000 and they would have to pay employees $25/unit. On top of that, the only real cost associated with this product is materials of $45/unit. The market research team has gone to confirm what demand for this product looks like, and the results have not been great. While Florie thought that demand would be high, research proves that demand is not as high as expected. They may only be able to sell 1900 after all. Florie thanks you for your time, and leaves the call. Cheryl tells you that sometimes Florie gets carried away, and that her ideas may not always be profitable. It would be helpful for Cheryl to be able to tell Florie exactly how many units would need to be sold in order to cover all of their costs. The number of units and sales value would be helpful to know. Cheryl asks you if you would also be able to help her understand a couple more items. She is looking to hire an internal accountant to help her with all of this. Her friend also just hired for an accountant and told Cheryl that it is important to hire an ethical accountant. Cheryl asks you to help understand the importance of ethics and how it could influence her hiring efforts? As well, she wants you to tell her what some best practices are when it comes to accounting in general.

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