K L M N 0 P Q B C D E F G H J 1 Project One is worth 75 Points. Project one is due by October 24th. Your submission should be well 2 documented (you MUST show your work). Your submission should be completed using Excel. (If 3 this is an issue, you MUST contact me to discuss) 4 5 Mark from Mark's Mowers wants to make some changes to his business. He has asked 6 each of his department managers (Production Marketing and Sales ) to submit a plan for 7 growth to you the General Manager. 8 9 Currently Mark is selling 500 lawn mowers a month at $240 each. His variable cost per 10 lawnmower is $175 each. His fixed cost per month are $ 25,000. 11 12 For purposes of this project assume that each scenario is within the relevant range (no larger space 13 is needed, no additional people will be needed and no additional fixed cost will be necessary. 14 15 16 Question 1. What is the current income / loss that Mark is incurring per month? 17 Question 2. What is Mark's current breakeven in units? 18 Question 3. What is Mark's current breakeven in dollars? 19 20 The Production Department is considering three different alternatives. 21 A. Switch to better raw materials which would increase Variable cost by 10% per unit. They believe 22 this would increase brand awareness and consequently increase unit sales by at least 12.5% 23 24 B. Switch to lower quality materials and become a "price conscience" distributer. The amount that the 25 Production department felt best was to decrease Variable cost by 25%. They believe that this would 26 likely reduce unit sales by no more than 20%. 27 28 C. Finally the Production Department thought a combination of lower quality materials reducing variable 29 costs by 10% combined with a lower retail price of $195 per mower would increase unit sales by at least 25%. 30 31 Question 4. How much money will Mark make in each of the separate situations? 32 Question 5. Which of the scenarios is best and why? 33 35 36 The Marketing Department is considering three different alternatives. 37 A. Do $5,000 in advertising. The Marketing department believe this would increase sales by 38 at least 35 units. 39 40 B. Do S 10,000 in advertising. The Marketing department believe this would increase sales by at least 41 65 units. 42 43 C. Do S6,000 in advertising combined with a "sales" price of $225 (a 10% discount). The 44 believe that this would increase sales by at least 54 units. 45 46 Question 6. How much money will Mark make in each of the separate situations? 47 Question 7. Which of the scenarios is best and why? 48 49 50 The Sales Department is also considering three different altematives. 51 A. Offer a commission of $5 per mower to the sales force. They believe that this will increase sales by 52 at least 24 units. 53 54 B. Offer a commission to the sales force of $15 per mower. They believe that this will increase sales by 55 at least 35 units per month. 56 57 C. Offer a commission of S 25 per mower and increase the cost of the mower by S10. Even with the 58 higher price, they believe it would increase mower sales by at least 40 mowers per month. 59 60 Question 8. How much money will Mark make in each of the separate situations? 61 Question 9. Which of the scenarios is best and why? 62 63 64 Question 10. As the General manager of Mark's Mowers which of the above scenarios do you this is 65 best going forward and why? 66