Child's Play Company Child's Play Company makes a plastic rattle for toddlers. The rattle is generally marketed through exel retaleis localed in upscale shopping malls. In late 2017. Diana Suarez, the president of the company, considering an alternative marketing plan for 2018 that was presented to her by Bil Duffy, the marketr. manager. Based on sales from January through October 2017 . Diana expected that 2018 sales would to 300,000 units. Bill's alternative marketing plan is presented below: 2018 Marketing Plan: "At the present time, we sell the product to retalers for $8.00 per rattle. Retaile generally charge the consumers between $9 and $950 If we cut cur selling price to retarers to $750 that the product will do much better. Their increased markup will give them the incentive to display owf more prominenty and to promote it more vigorously to customers. We should support this strategy by supplying more promotional materials to fetailers. Whech fexect would be an increase of $4.600 in Ad and Promotion costs. Based on the price cut and the increase in acvertising and promotion, 1 expect 1 will be able to boost our sales volume by 20 percent to 360.000 units in 2018 Dana recened cost data from the eompanys CFO. Don Caop Don expects that the cost data belowi. telable estimates for 2018 for a production voluene up to 400 Do0 unts. Beyond 400000 unts, the col Would have to rent additichal machines (weth a capacity of 100.000 units each). Which would inciease f ) manufactuting overheat costs by $50 000 per machne. 2011 Cost Data Manufacturing Kosts for rattles (based on production volume of 300,000 anits) Diect Aaterials 30 ed perie unt Packajog 6610000 Diana received cost data from the company's CFO. Don Capp. Don expects that the cost data below: reliable estimates for 2018 for a production volume up to 400,000 units. Beyond 400,000 units, the cor would have to rent additional machines (with a capacity of 100,000 units each), which would increase f manufacturing overhead costs by $50.000 per machine. 2017 Cost Data Manufacturinn Costs for rattles fbased on oroduction volume of 300.000 units): Sellind and Administrative Costs for rattles (based on sales volume of 300,000 units): Instructionst Using the information on this tab, complete Parts 1 and 2 on the next fwo tabs. In 1ecolve partial credit. please be sure to show your work. Using the information on the Tinstructions" tab, answer the following questions. Include all costs (manufacturing costs and selling and administrative costs) in your calculations. 1. Prepare a CVP Income Statement for 2017 using the current production and sales volume 30 tattles) and the current cost data, assuming no changes to selling price or costs, Child's Play Company CVP Income Statement 2. Dotermine the number of rasties the company would need to sell in 2017 in order to break-eve! assuming no changes to selling price. or costs. Please ahow your work and round to the feare. 2. Determine the number of rattles the company would need to sell in 2017 in order to break-eves assuming no changes to selling price or costs. Please show your work and round to the neary whole unit 3. Assuming the selling price and cost changes in the Marketing Plan are adopted, prepare a C, Income Statement for 2018, assuming sales and producton increase by 20% as outined in the M Plan: Child's. Play Company CVP Income statement For the Year Ended December 31; 2018 4. Assuming the selling price and cost changes in the Marketing Plan are adopted, determine th of rattles the company would need to sell in 2018 in order to break-even. Please show your work. round to the nearest next whole unit. 5. Assuming the selling price and cost changes in the Marketing Plan are adopted. determine th of rattles the company would need to sell in 2018 in order to earn $100.000 in profit. Please show work and round to the nearest next whole unit
