I need help. This is due tonight

Instructions: Please refer to the 4^thcase, Crescent Pure, we have talked about for the problems below.

Let's assume you were Sarah Ryan, vice president of marketing for Portland Drake Beverages (PDB), a manufacturer of organic juices and sparkling waters. While it is an issue how Crescent Pure is better positioned, is it a really profitable business if PDB goes forward with its soft launch described in the case to a national launch?

According to the case, PDB has distributors and retailers in its marking channel system (See p. 2 of the case under "Beverage distribution in the US"). PDB needs to work with them and secure their margins in order to deliver Crescent Pure products to their consumers. As we have learned "Trade Margin (= Channel Margin)" in Kerin's Chapter 2, you must work backward from the consumer retail selling price through the marketing channel to arrive at the manufacturer's product's selling price. Then, you will be able to understand "the Cost and Profit" of your company, PDB. Your tasks are described below in sequences.

Retailer Metrics

per Can

per Case

24 Cans = 1 Case

Retail Selling Price

$2.75

Note:As given on p. 3 of the case: "PDB management decided that Crescent's retail price would be $2.75..."

$66.00

Note:This is retailer's selling price per "Case" when "24 Cans per Case." So, $2.75 X 24 = $66

Retail Dollar Margin per unit

1.1) ___________

Note:Compute dollar margin per can based on retail selling price per can. Margin ratio is given as 40% (in the box below).

1.2) ___________

Note:Retail Dollar Margin per can (you've computed it in the left box) X 24 = ?

Retail Margin ratio (%)

40%

Note:As given on p. 2 of the case: "When selling to the consumers, retailers added an average margin of 40% to products purchased from distributors...."

40%

2nd Task:We're going to look at Distributors' Metrics below. Read all notes in the boxes for directions and instructions, and fill out the table.(1pt each, total 3pts)

Distributor Metrics

per Can

per Case

24 Cans = 1 Case

Distributor Selling Price

$1.65

Note:From Retailer Metrics above, Retailer's price - Retailer Dollar Margin = Distributor Selling Price.

2.1) ___________

Note:Compute distributor's selling price per "Case" when "24 Cans per Case." See distributor's selling price per can in the left box.

Distributor Dollar Margin per unit

2.2) ___________

Note:Compute dollar margin per can based on distributor selling price per can. Margin ratio is given as 25% (in the box below).

2.3) ___________

Note:Distributor Dollar Margin per can (you've computed it in the left box) X 24 = ?

Distributor Margin ratio (%)

25%

Note:As given on p. 2 of the case: "Distributors assigned an average margin of 25%..."

25%

3rd Task:Finally, we're now looking at Manufacturer (PDB)'s Metrics below, which is your company. Read all notes in the boxes for directions and instructions, and fill out the table.(1pt each, total 5pts)

Manufacturer (PDB) Metrics

per Can

per Case

24 Cans = 1 Case

Manufacturer (PDB) Selling Price

$1.24

Note:As given on p. 3 of the case: "PDB's wholesale price to distributors was..."

$29.76

Note:As given on p. 3 of the case: "PDB's wholesale price to distributors was..."

Manufacturer (PDB) Variable Costs

3.1) ___________

Note:Find this info in the case. See p. 3.

3.2) ___________

Note:PDB's Variable Costs per can (you've found it from the case, and written it in the left box) X 24 = ?

Manufacturer (PDB) Dollar Margin per unit ($)

3.3) ___________

Note:How to compute "Unit contribution (= Gross margin per unit)"?

3.4) ___________

Note:PDB's Dollar Margin per can (you've computed it in the left box) X 24 = ?

Manufacturer (PDB) Margin ratio (%)

3.5) ___________

Note:How to compute "Contribution margin ratio"? Write in percent with only 2 decimals. Round down your number here.

4th Task:Let's see if Crescent Pure is a profitable business or not!Let's estimate Net Sales ($) of Crescent Pure per year based on the conditions and constrains given in the case.(2pts each, total 6pts)

Net Sales Estimation will be....

4.1)

$__________ per case

Note:What's Manufacturer (PDB) Selling Price per Case? See p. 3 of the case.

X

4.2)

__________ cases per mth

Note:What is the maximum production capacity of Crescent Pure per month in 2014? See p. 3 of the case.

X

12 mths

Note:one year = 12 mths

=

4.3)

$__________

Note: Yeah! This is your sales!

5th Task: Let's estimate Gross Margin (= Total Contribution; $) of Crescent Pure per year based on the conditions and constrains given in the case.(2pts each, total 6pts)

Gross Margin (= Total Contribution) Estimation will be....

5.1)

$__________ per case

Note:What's Manufacturer (PDB) Gross Margin per Case? You've computed it at 3.3 in the above table.

X

5.2)

__________ cases per mth

Note:What is the maximum production capacity of Crescent Pure per month in 2014? See p. 3 of the case.

X

12 mths

Note:one year = 12 mths

=

5.3)

$__________

Note: Yeah! This is your total contribution (= Gross margin)!

6th Task: Let's estimate Net Profit ($) of Crescent Pure per year based on the conditions and constrains given in the case.(6pts)

Note:Your advertising budget is $750,000 given in the case, which is one of the fixed costs. No other fixed costs information provided, except this budget. However, there should be some other fixed costs in many of reasonable situations.

7th Task:What you've got from Sixth Task is what you get as Net Profit (before taxes). This is your bottom line (= net profit) from your soft launch of Crescent Pure in 15% of the national market. If you were Sarah Ryan, vice president of PDB marketing, are you going to move forward with a nation-wide launch? Is it a profitable business?(6pts)

Note:Estimate the national scale full launch net profit, and see if the calculated net profit is satisfactory enough for you. Remember you are Sarah Ryan, vice president of PDB marketing, and PDB is a good sized company which may approve only good profitable businesses.