1. Please conduct a financial analysis to determine the break-even point
2. Please produce a budget income statement or statements needed in financial analysis
3. Please conduct a SWOT analysis on given case study

CASE CASE 7 Unique Display Cases, Inc. Charles Smith was wondering what his next move should be in developing the market for his die-cast toy car display case for displaying diecast cars such as Matchbox and Hot Wheels cars. He knew he had to use a cost effective marketing strategy based on his limited financial resources. He didn't feel he had developed his ideas well enough to secure a bank loan or interest potential investors, but he knew he had a product with good potential sales if he could just get it launched. He was even more encouraged when a friend showed him all the websites related to collecting die cast toy cars and trucks and the widespread interest in these collectibles. Matchbox/Hot Wheel Cars History Matchbox cars and Hot Wheels have an interesting history. The earliest Matchbox cars can be traced back to 1953 when a company called Lesney Products created a small model of the Queen's Coronation Coach. Although this model wasn't as small as an official Matchbox car, it gave the company the needed resources to move forward with other models. Soon after this, one of the owners of the company was presented with a unique opportunity. His daughter's school only allowed toys small enough to fit into a match box to be taken to school and played with. Seeing opportunity in this problem, the company started to produce a scaled down version of the companies very first dinky car, a 1948 road roller, thus creating Matchbox car idea. The cars were indeed small enough to fit inside a matchbox and two other models were built during this first phase, a cement truck and a dump truck. To prove that the cars were small enough to fit into a match box, they were actually shipped with replica matchboxes and thus the Matchbox car was born. Hot Wheels zoomed onto the die-cast toy-car scene in 1968. Even though the market was already a crowded one, they became a big favorite among both toy collectors and tots because an axle and rotating styrene wheels were added to the traditional toy car, Hot Wheels became the fastest miniature autos available. They were also the flashiest. Brighter colors and decorated exteriors gave Hot Wheels a sense of drama that kids just couldn't get enough of. Mattel also created one of the most wanted toy accessories of all: the Hot Wheels track system. The track sections, connectors, loops, curves, ramps, launchers and speedometers, the DIY racetrack could be built and rebuilt over and over in different configurations. Mattel also added other accessories like spring-loaded launchers and battery-run supercharger power boosters, to really speed up the race. Lesney continued to market the Matchbox brand until the company's bankruptcy in 1982. Unfortunately, competition from larger brands like Hot Wheels had cut into its profitability, leaving Lesney in a poor financial situation. The Matchbox name and facilities were later sold to Universal Toys who reorganized the company and formed Matchbox International Ltd. Eventually Universal sought to sell the successful Matchbox brand and Tyco Toys became the new owner. In an interesting twist, the Tyco Toys division that purchased the Matchbox name was itself purchased by toy giant Mattel, who was also the owner of the popular Hot Wheels brand. Company Background Charles and Cindy Smith incorporated Unique Display Cases, Inc. in 2004 for the purpose of making and selling woodwork crafts. Later the company developed a product for the storage and display of die-cast toy cars. The basic design of this product is a wooden shadow box in the form of an eighteen-wheeler truck (see Exhibit C7.1). Encouraged by friends and relatives, the Smiths set up a mail-order system for consumers to purchase the product. Unique Display Cases advertised the display case in Country Sampler Magazine in April, 2004. Response to the advertisement was overwhelming, so the Smiths decided to keep concentrating on mail order sales. The success of the wooden product prompted the company to research producing the truck in plastic and distributing it through retail outlets. A patent was obtained for the plastic display case. To act as an agent for the production and sale of the plastic product, the company entered into an agreement with a design company. A prototype of a plastic injection molded truck was developed and displayed at a convention in 2005. At this time, a major toy manufacturer requested a proposal on licensing the product from the design company. The design company responded to the Unique Display Cases owners with a new agent agreement that drastically increased the design company's commissions. The Smiths refused to sign the new agreement and all communication with the design company ceased. Since that time, no further attempts to commercialize the product have taken place. The contract established with the design company expired, thus releasing the Unique Display Cases from any obligations. This created the opportunity for the company to enter the market with the plastic injection molded, wall-mounted, display case for die- cast toy cars. Die-cast toy cars considered to be collectibles ranged in price from $.99 to $299.00 among collectors with rare cars being auctioned for much higher prices. Market Analysis Collecting stamps, baseball cards, or bottle caps has always been a practice of consumers, this does not differ in the case of die-cast toy cars. Many people collect Hot wheels and Matchbox brand cars; and like most collectors, these individuals want a setting in which to showcase their collections. Customers of Unique Display Cases, Inc. are mainly adults. Men mostly collect Hot wheels and Matchbox cars, while women tend to buy them as gifts for collectors or for their children. The Internet contains numerous web pages devoted to the collection of Hot wheels and Matchbox toy cars. This data reinforces the belief that a market for the Unique Display Cass's products exists. EXHIBIT C7.1 The Wooden Unit Parents will buy the product to fulfill two purposes: first, to provide a place for their children to store the cars when they are not playing with them, and second, as a way to decorate their children's room. Collectors not only need a place to store their cars, but also a way to showcase their prized collectibles. Collectors can also use the product to better organize their collections. Since, the majority of the purchases are gifts, sales for the wooden display case typically increase during the months between October and January (due in large part to Christmas). Women make the majority of the purchases of the display cases, and men make most of the individual toy car purchases. Product Analysis A wooden version of the mounted display case enjoyed a great deal of sales success in the years leading up to this point. Advertising in only one hobby magazine produced sales of over $50,000 in the first year. These magazine ads generated sales for five years, with a number of sales occurring after the ads were cut at the beginning of 2006. The sales of the wooden display case provided evidence that a market for this type of product existed. Exhibit C7.2 shows the sales of the wooden display case; however, one must keep in mind that promotions for this product were cut in year 5. The new product would be an injection molded, wall-mounted, display case designed to house twenty die-cast cars (Hot wheels and Matchbox cars). The case is fashioned in the design of an eighteen-wheeler truck; it is 28 inches long. 8 1/2 inches high, and 3/4 inches deep. The estimated production cost per unit is $7.50. adequate markup. Exhibit C7.4 presents the expected cost structure for the Unique Display Cases display case developed by their accountant. Based on competitive prices, the Smiths expected to offer their product in direct to consumer sales for $24.99 plus $2.99 for shipping and handling. The price to retailers would have to be negotiated but would be 3040% less to allow an adequate markup for the retail firms. The production cost of $7.50 was based on a production run of 5000 units in one color. At 10,000 or more units, production cost would drop to $5.75 per unit. The company that would produce the plastic unit had production capacity of 25,000 units a year. The injection model itself would have to be designed and manufactured by a design company. The cost of the mold was estimated to be about $10,000 and would be amortized over a 5 year period. The Smith's need to estimate how much additional investment is needed to launch the new product, including the injection mold. purchase of an inventory of shipping boxes, and an investment in inventory of 5000 display cases, and operating capital to cover expenses until the sales volume was high enough to cover operating expenses. They also need financial projections for the product to determine the potential profitability at various sales volumes from a low estimate of 500 units to higher levels of sales like 1000, 5.000. and 10.000 units. These estimates or pro forma income statements would be needed to borrow capital to launch the product. Marketing the New Display Case Their previous marketing approach had been fairly successful for the wooden display case, although they felt they were in the dark about what past customers thought. Smith wondered how in the future, they could obtain feedback from purchasers and exactly what information should be sought to be managerially useful. The ads they had run produced sales for several years. However, they were not sure about how to reach the children's market or how to get their product into retail stores. The Smiths wondered if there might be a number of children's magazine through which to promote the product or the product or if there were some good specialty magazines carrying unique products that could generate mail orders. They had also thought about approaching one of the toy car manufacturers and trying to negotiate a license agreement for them to manufacture and distribute the display case, but were not sure about the implications of such a move. EXHIBIT C7.4 Plastic Display Case Cost Structure Variable costs: Production cost Packaging cost Shipping cost (from factory) Comment card cost & postage Total variable costs $7.50 $0.80 $1.50 $0.90 $10.70 Fixed costs: Storage Salaries Advertising Insurance $1000.00 $50,000.00 $1200.00 $500.00 | Total fixed costs $52,700.00 Their accountant had also suggested contacting one or more major retail chains as possible distributors. The volume that could be generated by any one of these large retailers would probably be enough to handle their current production capacity, especially if they were producing three different colors of the case. It appeared that all of these options should be evaluated before a decision was made about proceeding with trying to raise the money to launch the new product. CASE CASE 7 Unique Display Cases, Inc. Charles Smith was wondering what his next move should be in developing the market for his die-cast toy car display case for displaying diecast cars such as Matchbox and Hot Wheels cars. He knew he had to use a cost effective marketing strategy based on his limited financial resources. He didn't feel he had developed his ideas well enough to secure a bank loan or interest potential investors, but he knew he had a product with good potential sales if he could just get it launched. He was even more encouraged when a friend showed him all the websites related to collecting die cast toy cars and trucks and the widespread interest in these collectibles. Matchbox/Hot Wheel Cars History Matchbox cars and Hot Wheels have an interesting history. The earliest Matchbox cars can be traced back to 1953 when a company called Lesney Products created a small model of the Queen's Coronation Coach. Although this model wasn't as small as an official Matchbox car, it gave the company the needed resources to move forward with other models. Soon after this, one of the owners of the company was presented with a unique opportunity. His daughter's school only allowed toys small enough to fit into a match box to be taken to school and played with. Seeing opportunity in this problem, the company started to produce a scaled down version of the companies very first dinky car, a 1948 road roller, thus creating Matchbox car idea. The cars were indeed small enough to fit inside a matchbox and two other models were built during this first phase, a cement truck and a dump truck. To prove that the cars were small enough to fit into a match box, they were actually shipped with replica matchboxes and thus the Matchbox car was born. Hot Wheels zoomed onto the die-cast toy-car scene in 1968. Even though the market was already a crowded one, they became a big favorite among both toy collectors and tots because an axle and rotating styrene wheels were added to the traditional toy car, Hot Wheels became the fastest miniature autos available. They were also the flashiest. Brighter colors and decorated exteriors gave Hot Wheels a sense of drama that kids just couldn't get enough of. Mattel also created one of the most wanted toy accessories of all: the Hot Wheels track system. The track sections, connectors, loops, curves, ramps, launchers and speedometers, the DIY racetrack could be built and rebuilt over and over in different configurations. Mattel also added other accessories like spring-loaded launchers and battery-run supercharger power boosters, to really speed up the race. Lesney continued to market the Matchbox brand until the company's bankruptcy in 1982. Unfortunately, competition from larger brands like Hot Wheels had cut into its profitability, leaving Lesney in a poor financial situation. The Matchbox name and facilities were later sold to Universal Toys who reorganized the company and formed Matchbox International Ltd. Eventually Universal sought to sell the successful Matchbox brand and Tyco Toys became the new owner. In an interesting twist, the Tyco Toys division that purchased the Matchbox name was itself purchased by toy giant Mattel, who was also the owner of the popular Hot Wheels brand. Company Background Charles and Cindy Smith incorporated Unique Display Cases, Inc. in 2004 for the purpose of making and selling woodwork crafts. Later the company developed a product for the storage and display of die-cast toy cars. The basic design of this product is a wooden shadow box in the form of an eighteen-wheeler truck (see Exhibit C7.1). Encouraged by friends and relatives, the Smiths set up a mail-order system for consumers to purchase the product. Unique Display Cases advertised the display case in Country Sampler Magazine in April, 2004. Response to the advertisement was overwhelming, so the Smiths decided to keep concentrating on mail order sales. The success of the wooden product prompted the company to research producing the truck in plastic and distributing it through retail outlets. A patent was obtained for the plastic display case. To act as an agent for the production and sale of the plastic product, the company entered into an agreement with a design company. A prototype of a plastic injection molded truck was developed and displayed at a convention in 2005. At this time, a major toy manufacturer requested a proposal on licensing the product from the design company. The design company responded to the Unique Display Cases owners with a new agent agreement that drastically increased the design company's commissions. The Smiths refused to sign the new agreement and all communication with the design company ceased. Since that time, no further attempts to commercialize the product have taken place. The contract established with the design company expired, thus releasing the Unique Display Cases from any obligations. This created the opportunity for the company to enter the market with the plastic injection molded, wall-mounted, display case for die- cast toy cars. Die-cast toy cars considered to be collectibles ranged in price from $.99 to $299.00 among collectors with rare cars being auctioned for much higher prices. Market Analysis Collecting stamps, baseball cards, or bottle caps has always been a practice of consumers, this does not differ in the case of die-cast toy cars. Many people collect Hot wheels and Matchbox brand cars; and like most collectors, these individuals want a setting in which to showcase their collections. Customers of Unique Display Cases, Inc. are mainly adults. Men mostly collect Hot wheels and Matchbox cars, while women tend to buy them as gifts for collectors or for their children. The Internet contains numerous web pages devoted to the collection of Hot wheels and Matchbox toy cars. This data reinforces the belief that a market for the Unique Display Cass's products exists. EXHIBIT C7.1 The Wooden Unit Parents will buy the product to fulfill two purposes: first, to provide a place for their children to store the cars when they are not playing with them, and second, as a way to decorate their children's room. Collectors not only need a place to store their cars, but also a way to showcase their prized collectibles. Collectors can also use the product to better organize their collections. Since, the majority of the purchases are gifts, sales for the wooden display case typically increase during the months between October and January (due in large part to Christmas). Women make the majority of the purchases of the display cases, and men make most of the individual toy car purchases. Product Analysis A wooden version of the mounted display case enjoyed a great deal of sales success in the years leading up to this point. Advertising in only one hobby magazine produced sales of over $50,000 in the first year. These magazine ads generated sales for five years, with a number of sales occurring after the ads were cut at the beginning of 2006. The sales of the wooden display case provided evidence that a market for this type of product existed. Exhibit C7.2 shows the sales of the wooden display case; however, one must keep in mind that promotions for this product were cut in year 5. The new product would be an injection molded, wall-mounted, display case designed to house twenty die-cast cars (Hot wheels and Matchbox cars). The case is fashioned in the design of an eighteen-wheeler truck; it is 28 inches long. 8 1/2 inches high, and 3/4 inches deep. The estimated production cost per unit is $7.50. adequate markup. Exhibit C7.4 presents the expected cost structure for the Unique Display Cases display case developed by their accountant. Based on competitive prices, the Smiths expected to offer their product in direct to consumer sales for $24.99 plus $2.99 for shipping and handling. The price to retailers would have to be negotiated but would be 3040% less to allow an adequate markup for the retail firms. The production cost of $7.50 was based on a production run of 5000 units in one color. At 10,000 or more units, production cost would drop to $5.75 per unit. The company that would produce the plastic unit had production capacity of 25,000 units a year. The injection model itself would have to be designed and manufactured by a design company. The cost of the mold was estimated to be about $10,000 and would be amortized over a 5 year period. The Smith's need to estimate how much additional investment is needed to launch the new product, including the injection mold. purchase of an inventory of shipping boxes, and an investment in inventory of 5000 display cases, and operating capital to cover expenses until the sales volume was high enough to cover operating expenses. They also need financial projections for the product to determine the potential profitability at various sales volumes from a low estimate of 500 units to higher levels of sales like 1000, 5.000. and 10.000 units. These estimates or pro forma income statements would be needed to borrow capital to launch the product. Marketing the New Display Case Their previous marketing approach had been fairly successful for the wooden display case, although they felt they were in the dark about what past customers thought. Smith wondered how in the future, they could obtain feedback from purchasers and exactly what information should be sought to be managerially useful. The ads they had run produced sales for several years. However, they were not sure about how to reach the children's market or how to get their product into retail stores. The Smiths wondered if there might be a number of children's magazine through which to promote the product or the product or if there were some good specialty magazines carrying unique products that could generate mail orders. They had also thought about approaching one of the toy car manufacturers and trying to negotiate a license agreement for them to manufacture and distribute the display case, but were not sure about the implications of such a move. EXHIBIT C7.4 Plastic Display Case Cost Structure Variable costs: Production cost Packaging cost Shipping cost (from factory) Comment card cost & postage Total variable costs $7.50 $0.80 $1.50 $0.90 $10.70 Fixed costs: Storage Salaries Advertising Insurance $1000.00 $50,000.00 $1200.00 $500.00 | Total fixed costs $52,700.00 Their accountant had also suggested contacting one or more major retail chains as possible distributors. The volume that could be generated by any one of these large retailers would probably be enough to handle their current production capacity, especially if they were producing three different colors of the case. It appeared that all of these options should be evaluated before a decision was made about proceeding with trying to raise the money to launch the new product