Question
Please show step-by-step answers. Tender Most (2019 sales: $9,000,000) and Golden Best (2019 sales: $13,000,000). The 2020 sales estimates indicate a 10 percent (TM) and
Please show step-by-step answers.
Tender Most (2019 sales: $9,000,000) and Golden Best (2019 sales: $13,000,000). The 2020 sales estimates indicate a 10 percent (TM) and a 12 percent (GB) growth over the 2019 level for the two brands, respectively. The turkeys are supplied by Kentucky Meadow Turkeys, Inc. The supplier cleans and smokes the turkeys using the patented process and provides the necessary industrial packaging for safe shipment to the retail outlets. Hickory Hill coordinates the remaining retailing functions. The cured and packaged turkeys are purchased from the supplier on an FOB origin basis and sold to the retail outlets on an FOB destination basis. Approximately 30 percent of the sales revenue is attributed to direct variable costs for both the brands, and 45 percent of the direct variable costs are estimated to be actual turkey costs (again, for both brands). These costing percentages are expected to hold for the next few years. Products Tender Most and Golden Best are sold to retail outlets for $ 5.00 and $ 6.00 per pound, respectively. Golden Best sales in 2021, after four successive years of growth, are expected to remain at the 2020 level. However, due to some planned promotions and better positioning in advertising, a 15 percent sales increase is expected for the Tender Most line. Hickory Hill has recently changed over from the more traditional railroad refrigerator cars to inter-modal reefer containers operated by a freight consolidator, meaning there is no capacity constraint by minimum or maximum shipment size. It takes an estimated 4 days for the railroad to bring smoked turkeys from the supplier's factory to Butte, Montana (Hickory Hills centralized distribution point), and another 1 days on average for the commercial trucks to deliver them to the various retail outlets. Tender Most is shipped in the case pack size of 20 pounds, while Golden Best is shipped in 15-pound packs. The inventory carrying costs and the intransit inventory costs (both expressed as a proportion of the cost of the turkeys) are 12 percent and 15 percent per annum, respectively. The order processing costs are estimated at $10 per order thanks to a new automatic electronic ordering procedure. Hickory Hill pays $12 per hundred pounds shipped for the refrigerated containers and another $10 per hundred pounds for the commercial trucks (LTL shipments to stores, on a daily basis). There are 360 working days in the year.
To do:
a. What is the contribution margin of the Golden Best?
b. What is the cost of goods sold (COGS) of golden best?
c. What is the annual demand (in case) of the golden best in 2023?
d. What is the daily demand (in case) of the golden best in 2023?
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