Appendix Three (Cost-Volume-Profit Analysis)

Objective:

Based on the following Contribution Margin Income Statement the consulting group would like to evaluate if adding sales expenses as a fixed cost would be a beneficial strategy.

Scenario:

Projected Contribution Margin Income Statement Sales volume of packaged food items(units) 50,000 Revenue $ 900,000 Variable expenses $ 600,000 Contribution margin $ 300,000 Fixed Expenses $ 250,000 Net Operating Income $ 50,000

Appendix Four (Multi channel marketing)

Objective: To maximize output from packaging machines, the sales volume of packaged foods needs to increase. In order to increase sales, all possible channels will be explored. This includes accepting high volume, one-time orders (or special orders), where the selling price will be lower than that of the regular selling price. The goal is to evaluate at what price can the special orders be accepted.

Scenario:

The consulting group has developed the following cost structure for packaged foods. This is based on a production capacity of 30,000 units. The unit selling price is set at $50. The fixed manufacturing expense is constant in the range of 25,000 to 50,000 units. The maximum production capacity is 30,000 units. Item Per Unit Total Direct materials 9 270,000 Direct labour 6 180,000 Variable Manufacturing Overhead 4 120,000 Fixed manufacturing overhead 9 270,000 Variable Selling Expense 15 450,000 Fixed Selling Expense 2 60,000

Delivery:

• Upload both the written report and the Excel workbook to the assigned folder in eConestoga.
• One submission per group
• Your Professor will advise you as to the due date of this assignment.

Marking Key and Rubric:

• Included within the Excel workbook.
• Please review all items in the marking key before submission and ensure they are complete.
• All group members will receive the same grade if indicated likewise in the peer review form.