AutoSave . Off) - Assignment 2-Hobart Microbrew... Search Ashhab Sarwar AS X File Home Insert Design Layout References Mailings Review View Add-ins Help Share Comments Assessment task 2: Case Study is less familiar with the root beer market, and is aware that there is stiff competition, in the form of a wide range of You are required to provide estimates/answers for the following. (Correctly reference all your Due date: Week 10 Friday May 7" by 5.00pm specialty root beer available for sale in local grocery stores and supermarkets. Taking all of this into account, while he sources) Weighting: 25% would ideally like to sell anywhere up to 12 000 cases of root beer per annum, he realises that a more realistic figure would be about 6 000 cases. 1. By referring to last year's actual data and sales mix, calculate the total number of cases John would need to sell in order to earn $65,000 after tax. Then, break this figure down into the number of each product, which As the root beer does not n he would need to sell. Objective of the assignment: directly to specialty retailers, such as Bottle Shop, Thirsty Camel, BWS, and Dan Murphy. John could produce the root 2. Assume you performed the calculations in Question 1 correctly. In your report, identify and explain any issues The overall objective of this assignment is to develop skills that are crucial to gaining employment in the field of eer by out-sourcing production to a company who would allow it to be sold under the TMI brand (this option is referred to as "private label"). The stock would then be bought back by TMI for $13.25 per case, plus some variable handling related to your analysis in Question 1, and your assumptions that informed it (discuss each concern - what it Accounting and achieving long-term career success. These skills include: costs and other minor fixed costs. Alternatively, TMI could produce the root beer in-house (see Table 2 for estimated was and why it was a concern; do not simply discuss the general facts of the case, such as why TMI is 1. explaining and applying management accounting techniques for business planning and control; costs). charging a certain price for a particular product, or how TMI can reduce direct material costs). 2. identifying and analysing behavioural accounting, ethics, social responsibility, and sustainability issues, related to 3. John has a few options regarding Sedona Stout pricing. (a) keeping the sales price the same (no change); (b) management accounting and decision making; and increasing the sales price; or (c) decreasing the sales price. What would you recommend he do and why? 3. using professional, written communication to report decisions and recommendations, based on management Table 1. Per Case Information Provide both quantitative and qualitative analysis. accounting information. Saguaro Bisbee Ocotillo Sedona 4. John wants to achieve a sales figure that will optimise profits, by maximising the company's production Case Study: Hobart Microbrewery Pale Ale Bock Amber Stout capacity. What do you think? analyse and evaluate the strategies he is proposing to adopt to achieve these Pilsne s? Provide both quantitative and qualitative analysis. In 2015, John decided to start up his own brewery, Tasmania Microbrewery Inc (TMI). His family supported his decision. Sales Price $22 $24.5 $24 $27 and joined him in investing in the business. TMI began operations on January 1, 2015, and now produces four labels of Direct Materials, per case 2.75 2.5 3.25 45 5. On the basis of the sales forecast for root beer, recommend which of the two options (in-house or out-sourced out. For an explanation of the Variable overheads, per case* 6 5 95 5.9 5 5 production) would be the most financially viable, and andation with relevant brewing process, click here. Cases Sold last year 12 600 7 200 6 800 4 180 qualitative analysis. Direct Labour Hours, per case 0.25 0.20 0.25 0.35 Assume that the beer is to be produced and sold via a thre Machine Hours, per case 0.25 6. 0.35 0.20 0.30 What other issues, concerns, or further analysis would you want to discuss with John? These could pertain to who then sell to reta John employs two salespeople, who receive a fixed, monthly salary, plus a 5 percent Direct Fixed Costs 10,50 8,400 6,000 9,500 whether TMI should add root beer as a new product line and, if so, the issues and concerns related to in-house commission. The beer is sold to distributors in cases of 24 bottles. Product sales and some cost information for 2020, are production versus out-sourcing. You need to consider both numeric and non-numeric issues. Explain how shown in Table 1. John rents a which consists of an Common Fixed Costs 250,000 they relate to this company/option, and why they are important to consider el TMI brewery has five machines, with 9 500 total machine *Overhead cost Includes: production supplies, variable portion of maintenance, variable portion of utilities, hours available, per year, to produce the beer (assuming the employees of TMI only work one shift with some down-time variable office supplies. shipping costs, and 5% sales commission. Identify and analyse any social responsibility issues related to a brewing business like this (e.g., water usage, power usage, pollution, ... etc), and recommend some potential solutions. for regular maintenance). While there is additional space in the facility that could be used to expand the brew operations, the company would need to purchase an additional grain hopper and brew house (additional equipment and Table 2. Root Beer Costs machinery, such as a grain hopper, fermentation and storage tanks, filters, and extra cleaning and waste treatment systems) for about $150,000 (the curre Panel A: Alternative 1-Produce In-House Direct Materials, per case To create a cleaner, clearer product, the beer must be "aged', or 'largered', in a refrigeration unit. The temperature and $2 length of time required for this process to occur varies, according to the type of beer. For example, ales are usually Direct Labour Hours, per case 0.3 aged largered at between 4.5 and 13 degrees Celsius, for no more than a few weeks while lager s while lagers require a much lower Variable Overheads, per case 3.5 temperature (0 to 7 degrees Celsius), and a much longer time (typically months). IM Additional Fixed Costs, per year $38,000 ricity costs down. While, overall, TMI's sales are increasing, this growth has been somewhat erratic. For example, Panel B: Alternative 2-Out-Source Production from 2015 to 2018, sales growth was more than 35 percent, compared with only 10 percent, from 2019 to 2020. In Purchase price, per case $13.25 view of this, to meet any unforeseen rises in demand, the company has, therefore, adopted a strategy of deliberately stockpiling its beer. Variable Overheads, per case 0.15 Additional Fixed costs, per year $7,000 John has not taken a sal profits back into the business, with the aim of furt line Recently, he was thinking about increasing the price of Sedona Stout from $27 to $30.00, per case. decrease in the total annua es of the p act, by 10 percent. He is now considering dropping the price to $25 per case, estimating that this will boost sales by 11 percent per year. John has now approached you, a highly capable and reputable team of management and cost accountal Right now, John needs $150,000 to cover the cost of the additional equipment required to expand his company's based in Hobart. You were chosen because of your excellent reputation, and extensive knowledge of local operations. However, since the business is new, and has been posting only small profits, he has not been able to secure a market. John asks you to research the financial viability the proposed project, and to advise him, accordingly. bank loan. He has decided, th Your advice must be supported both by your Excel workbook calculations and qualitative evidence. producing all four of his produ ety of bee To further maximise profits, John is considering producing a new product, root beer, which is non-alcoholic. This would equire different machinery, which could be purchased second-hand, for $8,000. Based on market research, he estimates that he could charge $16 per case, for the new product. However, based on the same market research, he realises there is a lot of uncertainty around how many cases of root beer the company might actually manage to sell. Furthermore, John Page 3 of 3 1518 words x English (Australia) D FOCUS + 60%