I have got a case study for bella beverages. in that bella beverage was approached by Jrezy Inc. to produce and distribute. i have to do a quantitative analysis of private Label by calculating net present value, earning per share and return on equity.

1)common shares issued and outstanding= 4,578,555 for $3,662,844 2) shares outstanding = 80,000 3)Average material cost= $0.0602 4)production cost Management salary=$150,00 5) Advertising =$50,000 6)receive for one unit=$0.19/unit 7) no. of units=4,000,000

THEIR costs in BB's plant would be comparable, but with a $250,000 set-up COSI MU UUUU maintenance. John Van Besmin says that promotional costs would be about $300.000 higher than Santina's data indicates. Garphite maintains that incremental distribution costs would be about 5%. Transaction costs for the purchase would be approximately $25,000. Private Label Production In January 2012, the company was approached by a large, east coast supermarket chain, Jeezy's Inc. The chain would like to have BB produce under private label three brands of juice labelled as Jeezy's Fruit Zest. Jeezy will provide the recipe and BB will produce and distribute the product. The estimated annual volume is 4,000,000 servings and the length of the initial agreement would be one year, which could be renewed depending on how the product performs. The proposal is that Jeezy would pay $0.19 for each serving of the private label product. During 2011, BB's juice sales to Jeezy's Inc. amounted to 1,301,245 servings. BB estimates that it currently spends $50,000 on promotional costs related to Jeezy. Under the new arrangement, there would be a new manager that would work solely with Jeezy and would cost $150,000 annually. Possible Sale of Bottling Plant Lemieux has recently approached the other members of the BB management team with an offer to purchase the company's bottling facility for $5,000,000. This management buyout (MBO) would apply only to the assets and exclude any inventory. Lawyer transaction fees for BB if the sale went ahead, are estimated to be about $45,000. mennid that the new entity would provu at the new entity would provide BB with a long-term supply agreement, mi materials but would maintain Ole DD SUN UMNS alu JUICOs llave Ur Taru sampled For each product, the company aims to earn a gross profit on materials of at least 70%. Sales and cost data for 2011 are found in Table 1. All measures have been converted to 8-oz. (227-ml) servings for comparison purposes. The cost of materials represents a weighted average standard cost for the year and includes the cost of the juices. sweeteners, bottles, cardboard flats, and wrapping. Standard costs substantially approximate actual costs for the year. Table 1 - Beverage Statistics for 2011 Avg. Price ($) Total Sales ($) Average Materials Cost ($) Material COGS (5) 0.1863 0.1863 0.1863 0.1863 3.076.668 2.568.976 2.883.730 2.324.749 10.854.123 0.0688 0.0532 0.0543 0.0544 1.136.204 733.599 840.507 678.832 3.389.142 8-oz. (227-ml) Servings Sold BB Soft Drinks Mango-Plus Pop 16.514.588 Minnesota Spruce Beer 13.789.456 Limextreme Pop 15.478.956 Orangola Pop 12.478.526 58.261.526 BB Juices Caribbean Punch Plus 14.845.333 Fruit Zest 13.145.585 Apple-Berry Special 14.785.895 Pear Supreme 11.478.748 54.255.561 Total 112,517,087 "branded in the U.S. as Manitoba Spruce Beer 0.2430 0.2430 0.2430 0.2430 3.607.416 3.194.377 3.592.972 2.789.336 13.184.101 24,038,224 0.0587 0.0602 0.0586 0.0579 871.421 791,364 866.453 664,620 3.193.858 6,583.000 There are 80,000 stock options outstanding, all held by VPs and at various exercise prices. The compensation expense related to these stock options is accounted for under the international financial reporting standards for stock-based compensation. However the charges are minor and are captured under the annual expenses of the respective departments. Table 6- Shareholder Data at December 31, 2011 Average Exercise Price/Share Number Dollars $3,662,844 Common shares issued and outstanding Number of shareholders Stock options outstanding 4,578,555 252 80,000 $1.20 On a typical day, between 30,000 and 40,000 shares of BB stock change hands. This is a rather low trading volume and indicates little market demand. As a result, it is difficult for shareholders to liquidate their shares and employees have become less motivated to exercise their stock options. THEIR costs in BB's plant would be comparable, but with a $250,000 set-up COSI MU UUUU maintenance. John Van Besmin says that promotional costs would be about $300.000 higher than Santina's data indicates. Garphite maintains that incremental distribution costs would be about 5%. Transaction costs for the purchase would be approximately $25,000. Private Label Production In January 2012, the company was approached by a large, east coast supermarket chain, Jeezy's Inc. The chain would like to have BB produce under private label three brands of juice labelled as Jeezy's Fruit Zest. Jeezy will provide the recipe and BB will produce and distribute the product. The estimated annual volume is 4,000,000 servings and the length of the initial agreement would be one year, which could be renewed depending on how the product performs. The proposal is that Jeezy would pay $0.19 for each serving of the private label product. During 2011, BB's juice sales to Jeezy's Inc. amounted to 1,301,245 servings. BB estimates that it currently spends $50,000 on promotional costs related to Jeezy. Under the new arrangement, there would be a new manager that would work solely with Jeezy and would cost $150,000 annually. Possible Sale of Bottling Plant Lemieux has recently approached the other members of the BB management team with an offer to purchase the company's bottling facility for $5,000,000. This management buyout (MBO) would apply only to the assets and exclude any inventory. Lawyer transaction fees for BB if the sale went ahead, are estimated to be about $45,000. mennid that the new entity would provu at the new entity would provide BB with a long-term supply agreement, mi materials but would maintain Ole DD SUN UMNS alu JUICOs llave Ur Taru sampled For each product, the company aims to earn a gross profit on materials of at least 70%. Sales and cost data for 2011 are found in Table 1. All measures have been converted to 8-oz. (227-ml) servings for comparison purposes. The cost of materials represents a weighted average standard cost for the year and includes the cost of the juices. sweeteners, bottles, cardboard flats, and wrapping. Standard costs substantially approximate actual costs for the year. Table 1 - Beverage Statistics for 2011 Avg. Price ($) Total Sales ($) Average Materials Cost ($) Material COGS (5) 0.1863 0.1863 0.1863 0.1863 3.076.668 2.568.976 2.883.730 2.324.749 10.854.123 0.0688 0.0532 0.0543 0.0544 1.136.204 733.599 840.507 678.832 3.389.142 8-oz. (227-ml) Servings Sold BB Soft Drinks Mango-Plus Pop 16.514.588 Minnesota Spruce Beer 13.789.456 Limextreme Pop 15.478.956 Orangola Pop 12.478.526 58.261.526 BB Juices Caribbean Punch Plus 14.845.333 Fruit Zest 13.145.585 Apple-Berry Special 14.785.895 Pear Supreme 11.478.748 54.255.561 Total 112,517,087 "branded in the U.S. as Manitoba Spruce Beer 0.2430 0.2430 0.2430 0.2430 3.607.416 3.194.377 3.592.972 2.789.336 13.184.101 24,038,224 0.0587 0.0602 0.0586 0.0579 871.421 791,364 866.453 664,620 3.193.858 6,583.000 There are 80,000 stock options outstanding, all held by VPs and at various exercise prices. The compensation expense related to these stock options is accounted for under the international financial reporting standards for stock-based compensation. However the charges are minor and are captured under the annual expenses of the respective departments. Table 6- Shareholder Data at December 31, 2011 Average Exercise Price/Share Number Dollars $3,662,844 Common shares issued and outstanding Number of shareholders Stock options outstanding 4,578,555 252 80,000 $1.20 On a typical day, between 30,000 and 40,000 shares of BB stock change hands. This is a rather low trading volume and indicates little market demand. As a result, it is difficult for shareholders to liquidate their shares and employees have become less motivated to exercise their stock options