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Katy EH Manufacturing Company In mid-December 2015, Peter Johnson and Lily Brown were almost through with the 2016 operating budget for their company, Katy EH Manufacturing Company (EH). EH produced gas grills in three primary models (Grills A, B, and c). The industry was dominated by Coleman, Phoenix, Napolean, Meco, Holstein, which made several of types of gas and charcoal grills. Katy was a small player in the industry with solid customer base and a profitable business over last few years. This year was a little different -their profit was significantly lower than the prior years. The company's financials are provided in draft of the company's operating budget is shown in Exhibit 1 The company produces 3 products let's call them Grill A, B and C for simplicity. The standard costs for these three products are provided in Exhibit 2. The selling, general, and administrative (SG&Al, other costs, interest income, and interest expense were likely to remain the same n matter which product line combinations the company produced. The company hires your services as their consultant. They believe that they can improve their bottom- line (net profits) by changing the product mix, pricing and advertising decisions. (Note: The total production capacity is fixed at 400,000 units) (This case is adopted and modified from Cases in Managerial and Cost Accounting, Cambridge Business Publishers) 1. Should Katy EH drop Grill A? The owners wanted to know the impact of dropping Grill A from their line of products. Sharp was told to assume that the volumes and selling prices of the other two products would be the same whether or not the Grill A product line was dropped (3 points). 2. Should Katy EH lower the price of Grill C? The owners wanted to know the impact if they lowered the price of Grill C by $5 and if doing so led to a 20,000-unit increase in sales of Grill c (2 points) 3. Should Katy EH change its advertising focus? The owners wanted to know the impact of a 10,000-unit increase in Grill C volume and a related 10,000-unit decrease in Grill A volume because of a shift in advertising emphasis (3 points). 4. Prepare a revised 2016 profit budget assuming the owners chose option 2 lowering the price of Grill C by $5 and expecting sales volume of that grill to increase by 20,000 units (4 points) use the excel spreadsheet in this folder to solve this case. Provide a brief summary of what you have arned from the above exercise of budgeting (3 points)