MGMT 8500: 23W -capstone -V59P a g e 11 | 12Appendix Four (Multi channel marketing)Objective: To maximize output from packaging machines, the volume of packaged foods has too high. In order to sell them, all possible channels will be explored. This includes accepting high volume, one-time orders (or 'special orders). Due to the high volume, the selling price will be lower than that of the regular selling price. The goal is to evaluate at what price can the special orders be accepted.Scenario:The consulting group has developed the following cost structure for packaged foods. This is based on a production capacity of 30,000 units. The unit selling price is set at $50. The fixed manufacturing expense is constant in the range of 25,000 to 50,000 units. The maximum production capacity is 30,000 units.ItemPer UnitTotalDirect materials18540,000Direct labour9270,000Variable Manufacturing Overhead260,000Fixed manufacturing overhead14420,000Variable Selling Expense6180,000Fixed Selling Expense8240,000Due to market conditions, FSL can sell 20,000 units through regular channels. They plan to offer a quote to a large manufacturing facility to sell 9,000 units of the packaged food item, at a lower price. This would be a one-time order and can be classified as a special order. Since this would be sold directly to the client, there would be no sales commission and variable selling expense would be reduced by 70%. However, FSL has to buy freezer boxes so that the frozen items can be transported to the manufacturing facility. The freezer boxes would cost $ 39,000 and would be used solely for this special order. After that they would be sold as scrap to yield $4,000.Methodology:The group would calculate the offer price. The offer price will cover all variable expenses and include a 45% markup on variable expenses. They will also consider qualitative aspects before recommending acceptance ( or rejection) of this special order.

Alignment Number IN Styles A7 ~ : X V fx Cells Editing Analy A B C D F G H Data Set Calculations 7 60 00 V O UT A W N - 17 12 13 14 15 Marking key Appendix 2 Appendix 4 + ... Appendix 1 Appendix 3 Ready Accessibility: Investigate ENG US