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Case Study - Team Project Holstein Corporation12 PARTI In mid-November 2018, Bob, Paul and Cherry were almost through with the 2018 operating budget for their
Case Study - Team Project Holstein Corporation12 PARTI In mid-November 2018, Bob, Paul and Cherry were almost through with the 2018 operating budget for their company, Holstein Corporation. Holstein produced milk products in three primary forms (yogurt, cheese and ice-cream). The industry was dominated by Milksted, Laughingcow Happycow, and Holstein, which made several of types of milk products. Holstein was a small player in the industry with solid customer base and a profitable business over last few years. This year was a little different - their profit was significantly lower than the prior years. The company's proforma financials are provided in Exhibit 1 The company produces 3 products. The standard costs for these three products are provided in Exhibit 2. The selling, general, and administrative (SG&A), other costs, interest income, and interest expense were likely to remain the same no matter which product-line combinations are used by the company The company hires your services as their consultant. They believe that they can improve their bottom-line (net profits) by changing the product mix, pricing and advertising decisions. (Note: The total production capacity is fixed at 420,000 units). If the company decreases the price of its product, the result would be an increase in the sales of the product; the company provides you the following information on the estimated increase in the sales (based on the research by their sales team). Ice-cream $1.60 25,000 Cheese $1.10 20,000 Yogurt $0.75 12,000 Decrease in Price Increase in sales Part l and Il should be solved independent of each other This case is partly adopted and modified from Cases in Managerial and Cost Accounting, Cambridge Business Publishers
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