45.5% . Market research by Katherine's Chocolate Kompany indicates that sales of high-end chocolate bars will double in the price is reduced by $1. In addition, the annual cost of cannibalization will decrease by two-thirds. This doubling of sales will result in the doubling of mould and flavour costs, but this will be offset by reduced labour costs as a pastry chef will no longer be required. Instead, a highly skilled tradesperson that has also received training in chocolate making and production will be able to run the new machine. The machine costs $200,000, has a 10-year useful life, and no salvage value. The tradesperson will cost $55,000 per year. If Katherine decides to introduce target costing and wishes to generate a 15% retum on sales based on the lower price and increased demand, what will be the target cost of chocolate to obtain this result considering only variable costs! Corporate social responsibility is a key element of the company's strategy that Katherine needs to pursue. As such, Katherine did some preliminary investigation and has determined that there are indeed opportunities to work with some of the poorer chocolate farmers to significantly bolster their Cocos yields by introducing much better crop management processes. It would be Katherine's intention to approach the situation much like Toyota did, whereby Katherine's Chocolate Kompany employees would work directly with the farmers and the financial gains made through these initiatives would be split equally between the farmers and Katherine's Chocolate Kompany in examining the feasibility of this initiative, Katherine worked with agricultural engineers, as well as business and agricultural economies faculty at the University of Guelph and determined that hitting the target price for this specialty chocolate was imminently possible. The big question was exactly when it would happen and subsequently, how long it would take the farmers and the company to resize the Benefits of this initiative. Estimates suggest that the target price could be hit anywhere from the third year through the eighth year of the envisioned 10-year project. If part of Katherine's remuneration already includes a bonus for company profitability, what would you suggest as an incentive for Katherine with respect to the special nature of this project! 45.5% . Market research by Katherine's Chocolate Kompany indicates that sales of high-end chocolate bars will double in the price is reduced by $1. In addition, the annual cost of cannibalization will decrease by two-thirds. This doubling of sales will result in the doubling of mould and flavour costs, but this will be offset by reduced labour costs as a pastry chef will no longer be required. Instead, a highly skilled tradesperson that has also received training in chocolate making and production will be able to run the new machine. The machine costs $200,000, has a 10-year useful life, and no salvage value. The tradesperson will cost $55,000 per year. If Katherine decides to introduce target costing and wishes to generate a 15% retum on sales based on the lower price and increased demand, what will be the target cost of chocolate to obtain this result considering only variable costs! Corporate social responsibility is a key element of the company's strategy that Katherine needs to pursue. As such, Katherine did some preliminary investigation and has determined that there are indeed opportunities to work with some of the poorer chocolate farmers to significantly bolster their Cocos yields by introducing much better crop management processes. It would be Katherine's intention to approach the situation much like Toyota did, whereby Katherine's Chocolate Kompany employees would work directly with the farmers and the financial gains made through these initiatives would be split equally between the farmers and Katherine's Chocolate Kompany in examining the feasibility of this initiative, Katherine worked with agricultural engineers, as well as business and agricultural economies faculty at the University of Guelph and determined that hitting the target price for this specialty chocolate was imminently possible. The big question was exactly when it would happen and subsequently, how long it would take the farmers and the company to resize the Benefits of this initiative. Estimates suggest that the target price could be hit anywhere from the third year through the eighth year of the envisioned 10-year project. If part of Katherine's remuneration already includes a bonus for company profitability, what would you suggest as an incentive for Katherine with respect to the special nature of this project
