Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help answering and understanding all the minicase questions A-H for my entrepreneurial finance chapter 4 6th ed Chapter : Preparing and Using Financial

image text in transcribed

I need help answering and understanding all the minicase questions A-H for my entrepreneurial finance chapter 4 6th ed

Chapter : Preparing and Using Financial Statements 157 MINICASE Jen and Larry's Frozen Yogurt Company 2016, Jennifer IJan Liu and Larry Mestas founded Jen and Lary's Frozen Yogurt Company, which was based on the dea of applying the microbrew microbatch strategy to te product on and sale of frozen yogurt (The reader may recall that we introduced this yogurt venture in the problems section at the end of Chapter 2.1 Jan and Larry began producing mall quantities of unique flavors and blends in limited editions. Revenues were $600,000 in 2016 and were estimated to be $1.2 million in 2017 Because Jen and Lary were seling premium frozen yogurt containing premium ingredients, each small cup of yogurt sold for 3, and the cost of producing he frozen yogurt averaged $150 per cup Administrative expens8s, including Jen and Lamy's salary and expenses for an accountant and two other administative staff, ware estimated at $180,000 2017. Marketing expenses, largely in the form of behind-the -counter workers, in-store posters, and advertising in local newspapers, ware projected to be $200,000 in 2017 An investment in bricks and mortar was necessary to make and sell the yogurt Initial specialty equipment and the ren ovation of an old warehouse building in lower downtown (known as LoDo) occurred at the beginning of 2016 Additional equipment needed to make he amount of yogurt forecasted to be sold in 2017 was purchased at the beginning of 2017 As a resultdeprecaton expenses were Expected to be $50,000 in 2017. Interest expenses were estimated at $15,000 2017, The aratax rate was xpected to be 25 percent of taxable income A How many cups of frozen yogurt would have to be sold for the firm to reach its projected revenues of $1.2 million? 8. Calculate the dollar amount of EEDAT if Jen and Larry's Frozen Yogurt Company achieves the forecasted $1.2 million sales for 2017, What would EBDAT be as a percent of revenuBs? C. Jen and Larry believe that under a worst-case sosnario, yogurt revenues would be at the 2016 levell of $600,000 even ater plans and expenditures were put in place to increase rEVenues in 2017 What would happen to the venture's EBDAT what would happen to the venture's EBDAT if this were to happen pany. How mary cups of froen yogurt would have to be sold to reach EBDAT breakeven? D. Jen and Lamy also believe that, under optimistic conditions, yogurt TEVEnUBS Could reach S$1.5 million in 2017 Show E Calculate the EBOAT breakeven point for 2017 in terms of sunvival revenues for Jan and Larry's Fruzen Yogurt Com F. Show what would happen to the EBOAT breakeven in tems of survival revenues if the oost of producing a cup of yo gurt increased to $1.60 but the selling price remained at $300 per cup. How would the EBDAT breakeven change if production costs declined to $1.40 per cup when the yogurt selling price remained at $3.00 per oup? G. Show what would happen to the BBDAT breakeven point in tems of survival sales if an additional $30,000 was spent on advertising in 2017 while the other fixed costs Temained the same, production costs ramained at $1.50 per cup. and the seling price remained at $300 per cup Now assume that, due to competition, Jen and Lary must sell their fruzen yogurt for $2 80 per cup in 2017. The cost of producing the yogurt is expected to remain a $150 per cup and cash tixed oosts are forecastedbe $395,000 ($180,000 in administrative, $200,000 in marketing and $15,000 in interest expenses Depreciation expenses and he tax rate are aso expected to remain the same as projected in the intial discussion of Jen and Larry's veture. Calcu late he EB0AT breakeven point in erms of survival breakeven revenues

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Tidy Finance With R

Authors: Christoph Scheuch, Stefan Voigt, Patrick Weiss

1st Edition

1032389346, 978-1032389349

More Books

Students also viewed these Finance questions