Ketchup-Simulation Instruction: 4-11-21 (1) [Compatibility Mode] - Word 1ul'ie'uiu' '3' TEll me ..l'l-."-'lf _ I::|_| ..ant to ::|-::... cing _l : Align " as... __ J D 7% mm... A PoSItIon Wrap Bring Send Selection H After: ' Text 7 Fomrard " Backward Y Pane I\" Rotate ' I I; Arrange Ketchup Simulation General Information: The Ketchup Simulation was developed to help students better understand decisions surrounding the management of a diverse product line. In this case we are using the production of ketchup but the concepts in the simulation apply more broadly beyond the management of just ketchup production. You will manage a company's three product lines of 1602 ketchup (Organic. Core Brand. and Private Label]. After completing the simulation students should be able to: 0 Understand pricing and customer demand. 0 Establish a balanced pricing strategy for 3 diverse products to satisfy customer demand while generating sufficient gross margin. 0 Demonstrate an understanding of product design and the impact on product costs and customer demand. 0 Establish a balanced pricing and product design strategy to support a company brand. 0 Develop and implement a manufacturing strategy to fully utilize plant capacity. 0 Understand plant overhead and throughput utilization in the manufacturing process. Management Directive to You: The company has been producing 3 types of 1 So: ketchup for sale to consumers at various groceryr stores. The company sells a variety of other products in the food industry but this simulation is limited to these 3 products. Products are manufactured by the company and sold to various companies engaged in the retail grocery business. The three ketchup products you 1will focus on are as follows: Ir Organic Ketchup This is the most recent addition to the company's ketchup product line. It is aimed at health conscience consumers and management believes if properly designed and priced. this product can produce good margins and prots for the company. 0 Core Brand Ketchup The Core Brand is a well-known brand and has a strong reputation for quality and taste. Management is concerned that the Organic Ketchup product has the potential of hurting the "Core Brand\" if not produced and sold correctly. 0 Private Label Ketchup This product carries the name of the grocery store that buys and carries it [t normally has little impact on the company's brand image since consumers have no idea it is produced by the company. The Private Label ketchup is aimed at consumers who desire a lower priced product and are not as concerned about other product attributes. This product can be produced in the companies manufacturing facilities or another manufacturer produces it for a fee [C o-Fack]. Ketchup Simulation Instructions 4-11-21 (1) [Compatibility Mode] - Word View ? Tell me what you want to do.. Ing Align Before: 0 pt LEi Group Position Wrap Bring Send Selection After: 0 pt Text * Forward . Backward * Pane Rotate Arrange Management believes that product managers have neglected these 3 product lines over the past couple years. The company is projecting an earnings per share of $2.16 with losses for the Organic Ketchup product line. You can see the projected income statement below or by clicking on the "Income Statement" tab: Case Study - Ketchup 4/11/2021 Sales Volume [Units] 8,652 28,840,751 18,087,202 15,936,606 Grows Sales 19,403 5 62.512,326 5 12,000,745 74,552.476 Levi: Promotions 1600,000) $ (600,000) $ (2.000,000) Net Sales (580,597] S 61,712,328 5 11,420,744 5 72.562,476 Variable COGs (7.539.2971 5 Food COGS 16,150,2879 (1.796,501] 5 18,000,000) Obuglesonce atal COGS 540,1761 5 24,414,035 5 2.084,547 5 25,858,405 MS&D Expenses (3% of NS) 19.030 5 (571,037] 5 (3,627.624) Operating Income SIR, 509 5 Interest expense - root [304 of NS) 17,418 5 (1.851,370) $ (343,623) $ (3.176.574) Income Before Income Taxes 16,191412 $ 959.850 Income taxes (2154) (3,442.2071) $ (3,449.5821 (428,6041 3 11,097,841 159 5 10,800,427 * of NI Outstanding Shares 5,Do0 060 Fomings Per Share (PS) Management has asked your group to analyze and make changes in the following three decision areas: . Product Decisions Pricing & Promotion Decisions Manufacturing Decisions You will make these decisions in an attempt to maximize the projected Net Income and Earnings Per Share for the company. Accessing the Simulation: You can access the simulation by opening the Ketchup Simulation Spreadsheet. You should see the following screen: 2 WEKetchup Simulation Instructions 4-11-21 (1) [Compatibility Mode] - Word View ? Tell me what you want to do.. ng le Align lefore: 0 pt LEi Group Position Wrap Bring Send Selection After: 0 pt Text * Forward * Backward Pane Rotate Arrange Student Version Ill Ketchup Case Study 4-3-21 - Excel A Dariel fox - 0 x Files Home Insert Page Layout Formulas Data Review View Developer Help Tell me what you want to do A Share Com Syrup Case Study - Ketchup Product Decision 4/11/2021 Projected Financial Results: Organic Core Brand Private Label Total Total Volume (Units) 8,652 28,840,751 11,087,202 39,936,606 Net Sales (580,597) 61,712,328 11,420,744 72,552,476 Net Income (428,694) 11,097,861 131,259 10,800,427 Margin %% -73.8% 18.0% 1.1% 14.9% EPS 2.16 Packaging Decision: Please select one of each for Bottle, Lid, & Label. Organic Core Brand Private Label Bottle Coice: Plastic Glass Plastic Lid Choice: Screw On Lid Screw On Lid Screw On Lid I shall Chalaas Full Cales Black B. White Black B. urite &Accessibility: Investigate -+ 150% You will see 4 tabs at the bottom of the spreadsheet. The spreadsheet will open to the 'Product Decision" tab. You can access the other tabs by simply clicking on the respective tab. You will input decisions for this simulation using the following 3 tabs: Product Decisions . Pricing & Promotion Decisions Manufacturing Decisions The "Income Statement" tab will be used to view and analyze the impact of your decisions on the company's income statement. Product Decisions Click on the "Product Decision" tab to make product packaging design and Ingredient decisions. Packaging Decisions You will first make "Packaging" decisions by clicking on the yellow decision cell and clicking on the * I symbol to access the drop down menu. For example, you will decide on either using a plastic or glass bottle for Organic ketchup by clicking on the * I symbol and selecting either plastic or glass. You can see an example below: 3 WEKetchup Simulation Instructions 4-11-21 (1) [Compatibility Mode] - Word View ? Tell me what you want to do... ing I Align Before: 0 pt LE Group Position Wrap Bring Send Selection After: 0 pt Text * Forward . Backward * Pane Rotate G Arrange L Packaging Decision: Please select one of each for Bottle, Lid, & Label. Organic Core Bottle Coice: Plastic Plastic Lid Choice: Glass On Lid Screw Label Choice: Black & White Black & Continue to make packaging decisions for the rest of the products. Consider and pay close attention to how changes in the product attributes impact customer demand for the particular product Ingredient Decisions You will also make "Ingredient" decisions by clicking on the yellow decision cell and clicking on the I symbol to access the drop down menu. For example, you will decide on either using organic or non-organic tomatoes for Organic ketchup by clicking on the * I symbol and selecting either organic or non-organic. You can see an example below: Ingredients Decision: Please select one of each for Tomato & Sweetener. Organic Core Brand Private Label Tomato: Non-Organic Organic - Fresh Organic - Fresh Organic - Fresh Sweetener: Non-Organic Sugar Sugar Total Ingredients Cost: $ 0.58 $ 0.84 $ 0.84 Continue to make ingredient decisions for the rest of the products. Consider and pay close attention to how changes in the product attributes impact customer demand for the particular product. Pricing and Promotion Decisions Click on the "Pricing & Promotion Decisions" tab to make product packaging design and Ingredients decisions. Pricing Decisions You will base the price to charge the customer on a 25% retail margin that is standard in the industry for this type of product. You will make "Pricing" decisions by clicking on the yellow decision cell and clicking on the # | symbol to access the drop down menu. ForKetchup Simulation Instructions 4-11-21 (1) [Compatibility Mode] - Word View ? Tell me what you want to do.. ing Align lefore: 0 pt LE Group Position Wrap Bring Send Selection After: Opt Text * Forward . Backward Pane Rotate G Arrange example, you will decide on On-Shelf price for Organic ketchup by clicking on the el symbol and selecting the price. You can see an example below: 34.09 Pricing Decision: $2.19 Please enter a selling price f $2.29 $2.39 duct $2.49 $2.59 nic Core Brand Private Label Selling Price (per Unit): $2.69 Wholesale Price $2.79 $2.89 1.64 0.97 S 0.82 Avg Retail Margin $2.99 25% 25% On-Shelf Price $2.19 $1.29 $1.09 Continue to make pricing decisions for the other two products. Consider and pay close attention to how changes in the price impacts customer demand for the particular product. Promotion Decisions You will decide how to spend $2,000,000 of promotional dollars among the three products. You should be very cautious of going over the budget management has directed for spending. You should also make sure you wisely allocate the money amount the 3 products. You can spend less than $2,000,000 but that too may have adverse consequences in sales. You will also make the "Promotion" decisions by clicking on the yellow decision cell next to "Promotion Allocation" and clicking on the * I symbol to access the drop down menu. For example, you will decide on the promotion dollars spent on Organic ketchup by clicking on the * I symbol and selecting the dollar amount that you desire to spend. You can tell from above the decision how much you have either under or over spent. You can see an example on the next page: 5 WE x ]Ketchup Simulation Instructions 4-11-21 (1) [Compatibility Mode] - Word View ? Tell me what you want to do... ng le Align - fore: 0 pt LE Group Position Wrap Bring Send Selection fter: Opt Text * Forward * Backward Pane Rotate Arrange Organic Core Brand Private Label Selling Price (per Unit): S- Wholesale Price $100,000 .64 0.97 0.82 $200,000 Avg Retail Margin $300,000 25% 25% On-Shelf Price $400,00 $1.29 $1.09 $500,000 $600,000 Promotion Decision: $700,000 $800,000 Please enter a promotion ph $900,000 $1,000,000 Total Promotion Budget: $1,100,000 Total To Spend $1,200,000 0,000 $1,300,000 Total Spent $1,400,000 0,000 Under/(Over) Spent $1,500,000 $1,600,000 0,000) OVER BUDGET $1,700,000 $1,800,000 $1,900,000 Core Brand Private Label Promotion: $2,000,000 Promotion Allocation $ 300,000 $ 1,300,000 800,000 Per Unit Cost S 0.13 $ 0.02 $ 0.11 Continue to make promotion decisions for the other two products. Consider and pay close attention to how changes in promotion spent impacts customer demand for the particular product. WKetchup Simulation Instructions 4-11-21 (1) [Compatibility Mode] - Word C a coursehero.com/tutors/homework-help/ Breaks " Indent Spacing Align M Inbox (2) - owillia3.. M Gmail YouTube PP Maps @ A-Z Databases firection . Margins Orientation Si mLine Numbers Left: 0.25" : 1 Before: Opt Group . e Column's be Hyphenation Right |0" :+ After: 0 pt Text " Forward * Backward - Pane Paragraph Arrange Course I S Get homework help X Get connected with a verified expert tutor 24/7 Ask a question Connect with Tutor works on Receive your Receive answer and explanation in as few as 30 minutes Learn more an expert your question solution Manufacturing Decisions Click on the "Manufacturing Decisions" tab to make manufacturing decisions. Production Units Decisions 1. Ask your question i 1 free question expires today Your manufacturing plant has the capacity to produce 100,000,000 units of any of the 3 products. You also have a partner manufacturing company that can produce your Pr Pro tips to get helped ASAP reeded. You will n ke the In House "Production Units" decisions by BIUXXBAR clicking on the yellow decision cell next to "Units to Produce" and entering the amount units to produce. For example, you will decide on units to produce for Organic ketchup by Type your question or attach a picture here. Ask one question at a time clicking on the yellow cell and entering the number of units to produce in the plant. You can see an example below: capacity (Units]. 100,000,000 Drag and drop images or Upload Include all relevant information Units to Produce Under/(Over) Capacity 21,949,479 UNDER CAPACITY Use an image to ask a question that Next n-House Organic Core Brand Private Label is difficult to type Units : Units to Produce 2,234,987 72,815,534 3,000,000 ales Volume Forecasted 502,518 59,663,206 4,648,246 By submitting content (including uploads), you represent and warrant that you comply with Course Hero's Terms of Service, Honor Code, and Copyright Policy. You may only submit Over/(Under Produced) 1, 732,469 13,152,328 (1,648,246 content or upload materials where you own the copyright or where the copyright owner consented to uploading their content. Read our copyright policy here. Product that you produce and do not sell becomes obsolete so that overproducing product should be avoided. Consider and pay close attention to how changes in the price impacts customer demand for the particular product. Pay close attention to your product cost and 2. Select the best subject how it changes your marginal income for Private Label and the other two products. Assessment: 3. Enter the course I will assess your grade based on the Earnings Per Share you attain as follows: Earnings Per Share Points Over $ 9.00 100 $8.75 - $8.99 90 $8.50 - $8.74 80 $8.25 - 58.49 $8.00 - $8.24 60 Below $8.00 Final Words: p/10/202 Page 7 of 8 1315 words [ English (United States) Type here to search O Hi oz 49.F Clear ~ 5: (4 () 050 PMCalibri File Home Insert Page Layout Formulas Data Review View Add-ins Analysis Analysis De X Cut Calibri - 11 AA E Wrap Text BB Copy Paste Merge & Center . $ - % Format Painter Clipboard Font Alignment Number D26 V Glass Ketchup Simulation Product Decision 10/10/2022 Projected Financial Results: Organic Core Brand Private Label Total Total Volume (Units) 368,332 85,000,000 6,500,000 41,868,332 Net Sales (201,641) 72,737,500 8,068,300 80,604,159 Net Income (516,143) 13,035,944 (533,368) 11,986,433 Margin -256.0% 17.9% -6.6% 14.9% EPS S 2.40 Sales Volume Forecasted 368,332 37,487,797 7,397,029 45,253,158 Please select one of each for Tomato & Sweetener, Organic Core Brand Private Label Tomato: Non-Organic Organic - Fresh Non-Organic Sweetener: HF Corn Syrup HF Corn Syrup Sugar Total Ingredients Cost: .58 $ ).74 S ).59 Total Product Cost: 0.87 S 1.03 S 0.95Calibri File Home Insert Page Layout Formulas Data Review View Add-ins Analysis An X Cut Calibri 11 A A Fe Wrap Text Be Copy Paste B IUT = Merge & Center $ Format Painter Clipboard Font Alignment D19 fic 2.89 Ketchup Simulation Pricing & Promotion Decisions 10/10/2022 Projected Financial Results: Organic Core Brand Private Label Total Total Volume (Units) 368,332 35,000,000 6,500,000 41,868,332 Net Sales (201,641) S 72,737,500 $ 8,068,300 80,604,159 Net Income (516,143) 13,035,944 (533,368) 11,986,433 Margin % -256.0% 17.9% -6.6% 14.9% EPS S 2.40 Sales Volume Forecasted 368,332 37,487,797 7,397,029 45,253,158 Pricing Decision: Please enter a selling price for each product. Organic Core Brand Private Label Selling Price (per Unit): Wholesale Price 2.17 S 2.09 S 1.32 Avg Retail Margin 25% 25% 22% On-Shelf Price $2.89 $2.79 $1.69 Promotion Decision: Please enter a promotion plan for each item. Total Promotion Budget: Total To Spend 2,000,000 Total Spent 2,000,000 Under/(Over) Spent Organic Core Brand Private Label Promotion: Promotion Allocation $ 1,000,000 $ 500,000 $ 500,000 Per Unit Cost 2.00 0.01 $Calibri Student Version III Ketch File Home Insert Page Layout Formulas Data Review View Add-ins Analysis Analysis Design EPM Data Manager d Cut Calibri 11 - A A IT Be Wrap Text BB Copy - Paste $ - % " Conditional Format a Format Painter BIU- - A + Merge & Center Formatting Table Clipboard Font Alignment Number D422 500000 Ketchup Simulation Mfg Decisions 10/10/2027 Projected Financial Results: Organic Core Brand Private Label Total Total Volume (Units) 368,332 35,000,000 6,500,000 41,868,332 Net Sales (201,641) 72,737,500 8,068,300 80,604,159 Net Income (516,143) 13,035,944 (533,368) 11,986,433 Margin % -256.0% 17.9% 6.6% 14.99 EPS S 2.40 Sales Volume Forecasted 368,332 37,487,797 7,397,029 45,253,158 Production Decision: Plant Capacity (Units): Total Available Units 100,000,000 Units to Produce 12,000,000 Under/(Over) Capacity 58,000,000 UNDER CAPACITY In-House Organic Core Brand Private Label Units: Units to Produce 500,000 35,000,000 6,500,000 Sales Volume Forecasted 368,332 37,487,797 ,397,029 over/(Under Produced) 131,668 2,487,797) (897,029) Reduction (Over Capacity Adjusted Units to Produce 500,000 35,000,000 ,500,000 Total Produced 42,000,000 Overhead Allocation: Includes labor, depreciation, utilities, etc. Plant Overhead Total Overhead Cost $ 3,000,000 Organic Core Brand Private Label In-House Overhead Rate $ 0.19 S 0.19 0.19 Overhead Dollars Applied $ 5,238 6,666,667 1,238,095 Total OH Dollars: $ 95,238 6,666,667 S 1,238,095 Wholesale Price Per Unit 2.17 2.09 1.32 Variable Cost Per Unit 0.87 1.03 0.95 OH Per Unit Rate: 0.19 0.19 0.19 Profit/Loss Per Unit 1.11 0.87 0.18 Product Decisions Pricing & Promotion Decision Manufacturing Decisions ncome Statement + Ready Type here to search O S XECalibri Student Version Ill Ketchup Case File Home Insert Page Layout Formulas Data Review View Add-ins Analysis Analysis Design EPM Data Manager K Cut Calibri 16 - A A" - T - Wrap Text BB Copy - Paste Format Painter B IU - - Merge & Center Conditional Format as Formatting * Table Clipboard Font Alignment Number BI Ketchup Simulation Ketchup Simulation Income Statement 10/10/2022 Account Organic Core Brand Private Label Total Sales Volume (Units) 368,332 35,000,000 6,500,000 41,868,332 Gross Sales 798,359 $ 73,237,500 $ 8,568,300 $ 82,604,159 Less: Promotions (1,000,000) $ (500,000) $ (500,000) $ (2,000,000 Net Sales (201,641) $ 72,737,500 8,068,300 $ 80,604,159 Variable COGS (320,449) $ (36,050,000) $ (6,175,000) $ (42,545,449 Fixed COGS (70,158) $ (6,666,667) $ (1,238,095) $ (7,974,920 Obsolescence - Overproduced Inventory (139,631) $ (139,631 Total COGS (731,879) $ 30,020,833 655,205 29,944,159 MS&D Expenses (5% of NS) 10,082 $ (3,636,875) $ (403,415) $ (4,030,208 Operating Income (721,797) $ 26,383,958 251,790 25,913,951 Interest expense - net (3% of NS) 6,049 $ (2,182,125) $ (242,049) $ (2,418,125) Income Before Income Taxes 705,666) $ 20,564,958 (393,674) $ 19,465,618 Income taxes (26%) 183,473 $ (5,346,889) $ 102,355 $ (5,061,061 Net Income (516,143) $ 13,035,944 (533,368) $ 11,986,433 % of NS -256.0% 17.9% -6.6% 14.9% Outstanding Shares 5,000,000 Earnings Per Share (EPS) S 2.40 Product Decisions Pricing & Promotion Decision Manufacturing Decisions Income Statement +