Need help with the case questions below.
Panel : Soles and Marketing Data Cave Configuration Pounds per Case S Expected pounds per case Baps per Case E Exceled number of bags per case Forecasted Sales Volume Cases): First Month Sales Volume 55 000 Initial sales forecast for the fest month Monthly Sales Growth Year I Sales growth per month for the first year Months per year in Year 1 12 Number of months in a year Sales Forecast Error Percent 25% Percent possible sales forecast cron December Sales Volume First Year Sales Volume Annual Sales Volume after Year Sales Price Coupon Cons Commissions. Per Cree Sales Price to Retailers ($ per bag) Based on sales price / bag and number of bags / case Coupon Costs ($ per bag 0.20 Based on coupon per bag and number of bags per case Commission (percent) Percentage of sales price paid to brokers Moning/Package Design Males Salaries! Total Cost ($1 Useful Life Annual Slotting Costs Expected slotting costs to be expensed over n years Package Design Costs 2,010,000 Expected packaging design costs paid in the first year Sales Sabarice 400 000 Expected annual additional sales and marketing salaries to be paid Panel R: Production and Cost Data Raw Material Percents Costs /per MA Chicken 20:00%% 5 20000 Expected cost of chicken per Chicken Sensations pound Vegetables 55.00%% 5 0.5000 Expected cost of vegetables Chicken Sensations per pound Spactzels 15,00%% 5 D.1500 Bopected cost of spactacks per Clickes Sensations pound Total (Must be 100 percent) 100:00% Total must be 100 percent Weighted Average Raw Material Cost Weighted average cost per pound of Chicken Sensations Pounds per Case Total Raw Material Cost per Case Cardten Sensations cost per case (15 pounds per case) Parkarise Costs Pir Can 19 Bags 0.20 Based on price / bag and number of bags percase Box 0.30 Expected price per box with I boxper case Total Packaging Cost per Case Total packaging costs of bags and boxes per case Total Direct Maternal Costs per Case Total Chicken Sensations material and packaging costs Conversion Costs! Cost Per Libisi Direct Labor 0.30 Based on labor costs per pound and number of pounds per case Variable Manufacturing Overhead 0.40 Based on var. mig. overhead per pound and number of pounds per case Total Coversion Cost per Case Total conversion costs percase Total Variable Product Cost per Case Total direct material and conversion costs per case Retrofor Costs: Useful Life bypreciation Hetrin Costs 4000 000 Expected retrofit costs and depreciable lifeCase Questions: Would you decide m "hatch" Chicken d. Margin of safety: Prepare a margin of safery analysis Sensations? Put yourself in Vicki's shoes. Prepare an analysis (in cases and sales dollars) for the year 1 forecasts of that will guide PFVG's decision on whether to launch Chicken Sensations. Chicken Sensations. e. Sensitivity analyses: Prepare sensitivity analyses to 1. Economic feasibility analysis: Perform an economic cost- examine how robust year 1 results are to changes in benefit analysis of whether PFVC should launch Chicken projections for (1) the sales volume of cases, (2) the Sensations. Clearly state your decision and conclusion sales price per bag, and (3) the cost per pound of from your analysis. (You can use an Excel spreadsheet to chicken. Assume that these amounts can change for complete these tasks in an organized, neat appendix to three different projection levels as reported in Table 2: your case analysis. A reader of your case should be able (1) a pessimistic level, (2) the original level, and (3) an to follow your work and computations. The results of optimistic level. 'Table 2 shows that the sales volume your appendix analyses can be referenced in the body of (in cases) will be 75% of the original year 1 sales your case to support your decision.) To aid your analysis, forecast, the sales price per bag will only be 90% of perform the following tasks: the original forecast (or $2.70/bag = $3.00/bag x 90%%), a. Quantity, revenue, and cost conversions: "Take Vicki's and the cost per pound of chicken will rise to 112.50% data from "Table 1 and compute the quantity, revenue, of the original forecast (or $2.25 /1b. = $2.00/1b. x and cost conversions to complete 'lable 1. For 112.50%) for the pessimistic level. The original level example, calculate annual sales revenues (in cases), reports the results using the original projections in sales revenue and variable cost amounts per case, and the case. Under the optimistic level, the sales volume annual fixed cost amounts. forecast (in cases) will be 125% of the original year 1 sales forecast, the sales price per bag will increase to b. Forecasted contribution margin income statement: 110%% of the original forecast (or $3.30/bag = $3.00/ Prepare a forecasted Chicken Sensations contribution margin format income statement for year 1 based on bag x 110%), and the cost per pound of chicken will the projected data gathered by Vicki. decrease to 87.50% (or $1.75 /lb. = $2.00/lb. x 87.50%). c. Breakeven analysis: Prepare a breakeven point Report your sensitivity analysis results in Table 3. analysis (in cases and sales dollars) for the year 1 forecasts of Chicken Sensations. Table 2: Sensitivity Analysis Levels Parson Vegetable Company Sensitivity Analysis Levels (Percent of Original Projections) Chicken Sensations Pessimistic Original Optimistic Sales Volume Case Forecast 75.00% 100.00% 125.00% Sales Price per Bag 90.00% 100.00% 110.00% Cost per Pound of Chicken 112.50% 100.00% 87.50%
