Please solve problem #1, none of the others

Ia 2012. David Sot quit his job at a large heer tot his own hewy Amina Microwery. Inc. (AMI. Mis family parted his decision invested in the business with David AMI started operations o u 10, 2013 and e rs of specialty ben (San Pale Ale Buste Bock. Ocllo America and Sede Soul As i cs of the heer making process is shown in Appendix A la much of the United States (including Archiwaln e wym Under this sya , beris e d by producento destr o then sell to es such as lique doces, druge grocery stores, David employs to alespeople who receive a fixed bly salary plus anc i e All beer is sold in cases of 34 bodies so her distu s primarily in the Southwester United States Product sales and cost information for 2016 is shown in Exhibit with additional information in Exhibit 2. David ents a facility which is used to make the beachgeration area to store the beer and a ll office area. AMI brewery has machines wie 9300 stal machine hours available per year to produce beeruming they remain on ne shit with normal manance, hraste. While there is an empty space in the facility that could be used to expand the beer operation, the company would need to purchase an additional grain her and brew house for about 100,000 (the current water systems and process to system could be expanded to handle the new machine. As discussed in Appendix A. been an aged in a refrigeration are priarto sale. The current refrigeration unit allows for different temperatures in different was of the unit and the unit is usually running about 104 fullkeeping the retention somewhat full helps reduce re n tice costs. Additionally, since the company is a new, sales have been g ing but crratie (from 2013 2014. sales growth was over 45%; however, from 2015 to 2016 sales wwwth was cely 12). Thus, keeping in her cand allows the couny to the mati demand without low of sales. David has not taken a salary since the business stand. While the business has been enerating a small pratit, David has been revestig ingsbuck into the business. He was to grow the business cate ce profit for him and for his family. David has been considering increasing the price en Sede Sat .26.50 percato 19.00 per case. He thinks that, with this price increase unit sales will decret 18 .750 caves per year. However, this would retocalanmal St e fan SIIS760 SION,750. A matively. Ilavid could do the price of Sedena Set 35 percase. This is much conto the Black price as well as the Pines Rised on his mat c h be thinks that this will result in sales casing 4.700 per year. He want this tive as this will increase Se r SILOX760 $117.500 per year While the y has some cash on hand. cither the comm or David's family have der S100.000 vesishe business for a new gra p per and hrew house Since the hicis acw and has been showing only wallprofits, David has then be to at a les expand the business. Instead, David was to fully utilize the machines they acady have. In 2016, they used an aver machine hours as shown in Ext ) and the Cung five machines avea of 9.00 machines available during the year w ing Benalmadenance and repairs died during the year. Thus the existing machines and about 1.000 adical hours available for us, David wants to keep punducing and selling all four product lines as many of the her distributors like buying from breweries with several different her. However, he wants to direct the salespeople to emphasize a certain ponduct when they are out talking with her distributors. Given the machine availability, David is w what beer product line to tell the sales people to emphasize to maximize his petits Finally, David and his family lone root heer. Root beer follows a wamewhat simila so beeria that the ingredients are mixed together to form a "culture that the des through f acting filtering and filling Root heer would need to heaped or stored in the gerator. There is an empty area in the current microbrewery facility that could be dedicated to making met beer. As a result, David has been talking with his family about producing and welling a line of specialty met beer. Rootbeer would be produced a different machinery tuo the e ngine machines David's sister s e e who is getting out of the de business and would be willing to sell them the used machinery needed to make the root beer for SNKKI, Havde market research le has de David thinks that he could change $16.50 per Cave of other. Based on the market research, there is a lot of uncertainty in baw may Caves of other the company couldwell Davidis less familiar with the other market and there is a wide range of sales of specialty rather in the local s eries. Based on his understanding of the market. he thinks he could sell her 1.000 and 12,000 cases of not be with likely sales of what I cases Rootbeer could be sold to some of his current distributor However, sodadas e d to be sold through the three-tier system required for alcohol sales Therefore, who wobeer sales would be directly to scale mories such as La Grande Orange Grocery and P ria in Penix and Wule Foods and AS Fine Foods with locations the Arizona David could produce the other is b e out sound production. David has talked with the whold use the other for AMI Davids recipe and AMI could sell it as the brand (this tea is mefmed to a private Labem dhe purchased from this other company for SIS. PAG AMI would do are and costs and soc i edt. Ahely. AMI could produce the borbe See formados QUESTIONS e ad the You have been hired as a contable Dvd the h following is pop for your discussions with David would David aced to sell oder tocan SSOLO afer tax? How many of these cases would be coollo Anher Plaer? 2 la questa identified the sumber of cases the company was to all to cum s0.000 atler tax and how many cases of Occio Amber Pilsner. Awame you did the calculations in questione correctly. However, before discussing your soutien with the owa, identify and explain at least the issues related to your analysis and the assumptions comployed in your analysis in questione di cach e what it is and why it is a concedo NOT just question pral facts of the case w as why we are changing a certain price for one product or how we can reduce direc tenalost Chat Sink back to the CVP assumptions and consider how those assumpties might create potential issues with your analysis.) 3. more the desire to a 50.000 after tax and refer to the original data David has a few options regarding Sedona Siout pricing: alkeep the sales price the same change), b) increase the sales price or 3) decrease the sales price. What would you mind he do and why? Prowide both quantitative and qualitative analysis. Clint think about what it means to a lower the selling price from the customer's perspective what might signal! Does the sales price inyet volume? What might a change in volume mean that production sa int?) Next, immering the Sedona Sinut information, consider David's question regarding what product line the sales people should emphasize. David wants the sales efforts to maximize profits and utilize the company's current cucity. What would you tell him? Explain your natale. (Hint: Are there any constraints? What p hat line would you emphasize when there are no constraints and which would you emphasize given the constant faced by AMM 5. Analyzing the sales Bonecast foot be what preliminary one of action do yo r ed in house once pa d why? Support your mentation with her. (Hints you may want to calculate metres from the CVP chapelike heaven, bu marcin a p ting leverandpoint of indifference for each of your options, when analysing your options.) 6. What she i s our further side you w i th the the s i podig is should include buduric and The Do NOT just bulles w elted the male vs. buy deciso as well as the decito add to her as a w product APPENDIX A Beer Maling Process Beer is the call or term for fermented maltheage. There are y o kinds of her es dagen. With the bad categories there are many styles. Maale styles are pale ale PA porters and harleywine. Am the major ager les are pl . Maren back and dunkles (dark lager. AM makes two wes (San Pale Ale and Sedona Stout and we lapers (Octo ber Pilar and the Hack It is the cast that is a significant difference between the wie and the later. Ale yeastscapulae sely at the top of the term i na ne the type of yeast ales ferment best between 64 to 70 degrees Fahrenheit. Lager yeasts are more successful at colder temperatures, typically 50 to 55 degrees Fahrenheit and costulate closer to the bottom of the fermentation tank. Lager yeasts al tend to fent mane aggressively, leaving behind less residual sweetness and flavor than ales DIRECT MATERIALS: Beer primarily consists of 4 ingredients: Water, harley, hops and yeast. A clarifying ape is also used in the beer making pro The different types of beer require different proportions of these ingredients and even slightly different ingredientes Pale Ale uses a pale maled burkey while Sioul is made using a darker Toasted harley. BREWING PROCESS Work in the brewery is typically divided into steps: Mashingt. Lauering Baile Fermenting Conditioning, Filtering, Filling and Aging. Meshbup Mashing is the first process in brewing The barley grains are mixed with water in a large vessel. This mixture is heated up with periodic breaks, orests, at certain temperatures to allow enzymes in the male ains to break down the search is the gran inte sugars Lavtoria USA is when the mash is separated into a liquid and the residual grain. There are two as in sing. In the first stage called Wort run of a nder is w at in diluted ate from the used grains. The second stage is called spurging Du y uring the extract that remai with the grains is indoll without water. The results of these two stes are combined and the result is a dark, sugary liquid called Wert. This is returned to the original Mashim vessel Bong Boiling the West in the vessel cures the mixture is stered prevents infection. During the bola sepasan added to the Wort. The bas i cs ad flavor o the beer. The boiling wat be continuous and intense and pically lasts between 120 minute depending on insty, when the lapse added and the volume of Wort expected to pete. The Wert is the cooled before fermentat e FEBRER & Cond The cooled Wort is puno m akadisah was the meat process. This is ako the point which the past is first called heart is ing this stage that s h e was thered into all and carbon dioxide (the lies in boer. As woted above, formatie temperatures are very different for alles vers lagers. APPENDIX A Beer Making Process (Continued Pencatata takes about a week. When the sugars in the fermenting her have been almost completely digested the fermentation slow down and the yeast cells will u tally start to die off and begin to settle towards the bacon of the tank ALAMI, the term ice tanks have cooling jackets on them. Therefore, conditioning can take place in the same tank as fermentation Conditioning Calvo called utani when heer is cooled in the tanks to allow yeast to see to the bottom of the tank. Conditioning allows the flavor of the her to become mother and is a natural filtration ( wing cloudy material from the beer) Farine: The beer that comes out of the fermentation tank must be filtered prior to hotting Filtering the beer stabilizes flavor and gives beeils glass or "hine". Filtering t est of the year and any solids es laps and other in particles) that remain in the beer. Filing (aka "packaging) The filtered beer is put into the bottles in which it will have the houry. At this pov, carbon dioxide is added to the bottling process to increase the carbon dioxide is the beer. Caves of beer (consisting of 24 bottles) are then put into a ring Apir Heer is steed(aged or in the re u nit and the temperature and length of the aging will vary hased on the type of beer. Ales are usually aged more than a few weeks at 40 to 55 degrees Fahrenheit Laers are similarly wed but at much lower temperatures, 325 45 degrees Fahrenheit, and for a much longer typically months. This is called s t ates a cleaner, ceerbeer The refrigeration unit allows for different temperatures in different areas of the unit CASE EXHIBIT 1 2016 COST & SALES INFORMATION Acte Total Sales Price per case Direct Maris per case Direct Labor per case Variable Overhead percase Total VC por case Contribution Margin per Case Cases wollast year - L114 _30.70 020 0.36 Direct Labor Hours per case Total Direct Labor Hours last 3.148.25 1.781.50 1,365.40 146440 7.750.55 Machine Hound percase Total Machine Hours last year 0.40 2.850.40 0.25 1,708.75 2.518.60 1.256 20 4,830.95 Contribution lariningame Statement: Qocillo Lanuar Tate $264.453.00 $174.587.00 S16043450 $110,876.00 710,350 50 10.299 80 83.160.427 ,80375 45.547.44 017 DER S777752 Variable costs Canon Marian Directed Costs Senaran Como Fundos Operating income Taxes Nincome 313.91141 M 327921757 S2 2222 CASE EXHIBIT 2 ADDITIONAL COST INFORMATION 5 na Tanda Canta Direct Materials Direct Labor Production Supplies Variable portion of Maintenance Variable portion of utiles Variable Co ppies (sales format) 93,537.20 116,392.25 26.064.41 40.992 55 8% Sales Commission Total Variable costs 31.619.19 58.2014 S . n ad Tata Flunsa astisesti Brew Master Quality Control manager Receiving and Shipping department expenses 60,293.15 22,511.32 11.712 10 78.938.15 22.994.91 Facility costs anks, insurance, etc) Advertising & Marketing costs Fbrod portion of Martenance including IT support Fbeed portion of Uties including refrigeration Feed Salary of Salespeople Administrative assist owner 10.300.37 4.20G ES 32,221.81 26. 2.3 CASE EXHIBIT 3 ROOTBEER COST INFORMAITON Amant.mdsin.He Direct Materials per case Direct Labor per case Variable Overtread percase Total Variable coats per case Additional Fixed costs per year $ 37.640.00 These are recurring costs and does not include the purchase of the machine 13.05 Alam 2. uge Production Purchase price per case Variable Overhead percase Total Variable costs per case Additional Fixed costs per year S5,000.00 Ia 2012. David Sot quit his job at a large heer tot his own hewy Amina Microwery. Inc. (AMI. Mis family parted his decision invested in the business with David AMI started operations o u 10, 2013 and e rs of specialty ben (San Pale Ale Buste Bock. Ocllo America and Sede Soul As i cs of the heer making process is shown in Appendix A la much of the United States (including Archiwaln e wym Under this sya , beris e d by producento destr o then sell to es such as lique doces, druge grocery stores, David employs to alespeople who receive a fixed bly salary plus anc i e All beer is sold in cases of 34 bodies so her distu s primarily in the Southwester United States Product sales and cost information for 2016 is shown in Exhibit with additional information in Exhibit 2. David ents a facility which is used to make the beachgeration area to store the beer and a ll office area. AMI brewery has machines wie 9300 stal machine hours available per year to produce beeruming they remain on ne shit with normal manance, hraste. While there is an empty space in the facility that could be used to expand the beer operation, the company would need to purchase an additional grain her and brew house for about 100,000 (the current water systems and process to system could be expanded to handle the new machine. As discussed in Appendix A. been an aged in a refrigeration are priarto sale. The current refrigeration unit allows for different temperatures in different was of the unit and the unit is usually running about 104 fullkeeping the retention somewhat full helps reduce re n tice costs. Additionally, since the company is a new, sales have been g ing but crratie (from 2013 2014. sales growth was over 45%; however, from 2015 to 2016 sales wwwth was cely 12). Thus, keeping in her cand allows the couny to the mati demand without low of sales. David has not taken a salary since the business stand. While the business has been enerating a small pratit, David has been revestig ingsbuck into the business. He was to grow the business cate ce profit for him and for his family. David has been considering increasing the price en Sede Sat .26.50 percato 19.00 per case. He thinks that, with this price increase unit sales will decret 18 .750 caves per year. However, this would retocalanmal St e fan SIIS760 SION,750. A matively. Ilavid could do the price of Sedena Set 35 percase. This is much conto the Black price as well as the Pines Rised on his mat c h be thinks that this will result in sales casing 4.700 per year. He want this tive as this will increase Se r SILOX760 $117.500 per year While the y has some cash on hand. cither the comm or David's family have der S100.000 vesishe business for a new gra p per and hrew house Since the hicis acw and has been showing only wallprofits, David has then be to at a les expand the business. Instead, David was to fully utilize the machines they acady have. In 2016, they used an aver machine hours as shown in Ext ) and the Cung five machines avea of 9.00 machines available during the year w ing Benalmadenance and repairs died during the year. Thus the existing machines and about 1.000 adical hours available for us, David wants to keep punducing and selling all four product lines as many of the her distributors like buying from breweries with several different her. However, he wants to direct the salespeople to emphasize a certain ponduct when they are out talking with her distributors. Given the machine availability, David is w what beer product line to tell the sales people to emphasize to maximize his petits Finally, David and his family lone root heer. Root beer follows a wamewhat simila so beeria that the ingredients are mixed together to form a "culture that the des through f acting filtering and filling Root heer would need to heaped or stored in the gerator. There is an empty area in the current microbrewery facility that could be dedicated to making met beer. As a result, David has been talking with his family about producing and welling a line of specialty met beer. Rootbeer would be produced a different machinery tuo the e ngine machines David's sister s e e who is getting out of the de business and would be willing to sell them the used machinery needed to make the root beer for SNKKI, Havde market research le has de David thinks that he could change $16.50 per Cave of other. Based on the market research, there is a lot of uncertainty in baw may Caves of other the company couldwell Davidis less familiar with the other market and there is a wide range of sales of specialty rather in the local s eries. Based on his understanding of the market. he thinks he could sell her 1.000 and 12,000 cases of not be with likely sales of what I cases Rootbeer could be sold to some of his current distributor However, sodadas e d to be sold through the three-tier system required for alcohol sales Therefore, who wobeer sales would be directly to scale mories such as La Grande Orange Grocery and P ria in Penix and Wule Foods and AS Fine Foods with locations the Arizona David could produce the other is b e out sound production. David has talked with the whold use the other for AMI Davids recipe and AMI could sell it as the brand (this tea is mefmed to a private Labem dhe purchased from this other company for SIS. PAG AMI would do are and costs and soc i edt. Ahely. AMI could produce the borbe See formados QUESTIONS e ad the You have been hired as a contable Dvd the h following is pop for your discussions with David would David aced to sell oder tocan SSOLO afer tax? How many of these cases would be coollo Anher Plaer? 2 la questa identified the sumber of cases the company was to all to cum s0.000 atler tax and how many cases of Occio Amber Pilsner. Awame you did the calculations in questione correctly. However, before discussing your soutien with the owa, identify and explain at least the issues related to your analysis and the assumptions comployed in your analysis in questione di cach e what it is and why it is a concedo NOT just question pral facts of the case w as why we are changing a certain price for one product or how we can reduce direc tenalost Chat Sink back to the CVP assumptions and consider how those assumpties might create potential issues with your analysis.) 3. more the desire to a 50.000 after tax and refer to the original data David has a few options regarding Sedona Siout pricing: alkeep the sales price the same change), b) increase the sales price or 3) decrease the sales price. What would you mind he do and why? Prowide both quantitative and qualitative analysis. Clint think about what it means to a lower the selling price from the customer's perspective what might signal! Does the sales price inyet volume? What might a change in volume mean that production sa int?) Next, immering the Sedona Sinut information, consider David's question regarding what product line the sales people should emphasize. David wants the sales efforts to maximize profits and utilize the company's current cucity. What would you tell him? Explain your natale. (Hint: Are there any constraints? What p hat line would you emphasize when there are no constraints and which would you emphasize given the constant faced by AMM 5. Analyzing the sales Bonecast foot be what preliminary one of action do yo r ed in house once pa d why? Support your mentation with her. (Hints you may want to calculate metres from the CVP chapelike heaven, bu marcin a p ting leverandpoint of indifference for each of your options, when analysing your options.) 6. What she i s our further side you w i th the the s i podig is should include buduric and The Do NOT just bulles w elted the male vs. buy deciso as well as the decito add to her as a w product APPENDIX A Beer Maling Process Beer is the call or term for fermented maltheage. There are y o kinds of her es dagen. With the bad categories there are many styles. Maale styles are pale ale PA porters and harleywine. Am the major ager les are pl . Maren back and dunkles (dark lager. AM makes two wes (San Pale Ale and Sedona Stout and we lapers (Octo ber Pilar and the Hack It is the cast that is a significant difference between the wie and the later. Ale yeastscapulae sely at the top of the term i na ne the type of yeast ales ferment best between 64 to 70 degrees Fahrenheit. Lager yeasts are more successful at colder temperatures, typically 50 to 55 degrees Fahrenheit and costulate closer to the bottom of the fermentation tank. Lager yeasts al tend to fent mane aggressively, leaving behind less residual sweetness and flavor than ales DIRECT MATERIALS: Beer primarily consists of 4 ingredients: Water, harley, hops and yeast. A clarifying ape is also used in the beer making pro The different types of beer require different proportions of these ingredients and even slightly different ingredientes Pale Ale uses a pale maled burkey while Sioul is made using a darker Toasted harley. BREWING PROCESS Work in the brewery is typically divided into steps: Mashingt. Lauering Baile Fermenting Conditioning, Filtering, Filling and Aging. Meshbup Mashing is the first process in brewing The barley grains are mixed with water in a large vessel. This mixture is heated up with periodic breaks, orests, at certain temperatures to allow enzymes in the male ains to break down the search is the gran inte sugars Lavtoria USA is when the mash is separated into a liquid and the residual grain. There are two as in sing. In the first stage called Wort run of a nder is w at in diluted ate from the used grains. The second stage is called spurging Du y uring the extract that remai with the grains is indoll without water. The results of these two stes are combined and the result is a dark, sugary liquid called Wert. This is returned to the original Mashim vessel Bong Boiling the West in the vessel cures the mixture is stered prevents infection. During the bola sepasan added to the Wort. The bas i cs ad flavor o the beer. The boiling wat be continuous and intense and pically lasts between 120 minute depending on insty, when the lapse added and the volume of Wort expected to pete. The Wert is the cooled before fermentat e FEBRER & Cond The cooled Wort is puno m akadisah was the meat process. This is ako the point which the past is first called heart is ing this stage that s h e was thered into all and carbon dioxide (the lies in boer. As woted above, formatie temperatures are very different for alles vers lagers. APPENDIX A Beer Making Process (Continued Pencatata takes about a week. When the sugars in the fermenting her have been almost completely digested the fermentation slow down and the yeast cells will u tally start to die off and begin to settle towards the bacon of the tank ALAMI, the term ice tanks have cooling jackets on them. Therefore, conditioning can take place in the same tank as fermentation Conditioning Calvo called utani when heer is cooled in the tanks to allow yeast to see to the bottom of the tank. Conditioning allows the flavor of the her to become mother and is a natural filtration ( wing cloudy material from the beer) Farine: The beer that comes out of the fermentation tank must be filtered prior to hotting Filtering the beer stabilizes flavor and gives beeils glass or "hine". Filtering t est of the year and any solids es laps and other in particles) that remain in the beer. Filing (aka "packaging) The filtered beer is put into the bottles in which it will have the houry. At this pov, carbon dioxide is added to the bottling process to increase the carbon dioxide is the beer. Caves of beer (consisting of 24 bottles) are then put into a ring Apir Heer is steed(aged or in the re u nit and the temperature and length of the aging will vary hased on the type of beer. Ales are usually aged more than a few weeks at 40 to 55 degrees Fahrenheit Laers are similarly wed but at much lower temperatures, 325 45 degrees Fahrenheit, and for a much longer typically months. This is called s t ates a cleaner, ceerbeer The refrigeration unit allows for different temperatures in different areas of the unit CASE EXHIBIT 1 2016 COST & SALES INFORMATION Acte Total Sales Price per case Direct Maris per case Direct Labor per case Variable Overhead percase Total VC por case Contribution Margin per Case Cases wollast year - L114 _30.70 020 0.36 Direct Labor Hours per case Total Direct Labor Hours last 3.148.25 1.781.50 1,365.40 146440 7.750.55 Machine Hound percase Total Machine Hours last year 0.40 2.850.40 0.25 1,708.75 2.518.60 1.256 20 4,830.95 Contribution lariningame Statement: Qocillo Lanuar Tate $264.453.00 $174.587.00 S16043450 $110,876.00 710,350 50 10.299 80 83.160.427 ,80375 45.547.44 017 DER S777752 Variable costs Canon Marian Directed Costs Senaran Como Fundos Operating income Taxes Nincome 313.91141 M 327921757 S2 2222 CASE EXHIBIT 2 ADDITIONAL COST INFORMATION 5 na Tanda Canta Direct Materials Direct Labor Production Supplies Variable portion of Maintenance Variable portion of utiles Variable Co ppies (sales format) 93,537.20 116,392.25 26.064.41 40.992 55 8% Sales Commission Total Variable costs 31.619.19 58.2014 S . n ad Tata Flunsa astisesti Brew Master Quality Control manager Receiving and Shipping department expenses 60,293.15 22,511.32 11.712 10 78.938.15 22.994.91 Facility costs anks, insurance, etc) Advertising & Marketing costs Fbrod portion of Martenance including IT support Fbeed portion of Uties including refrigeration Feed Salary of Salespeople Administrative assist owner 10.300.37 4.20G ES 32,221.81 26. 2.3 CASE EXHIBIT 3 ROOTBEER COST INFORMAITON Amant.mdsin.He Direct Materials per case Direct Labor per case Variable Overtread percase Total Variable coats per case Additional Fixed costs per year $ 37.640.00 These are recurring costs and does not include the purchase of the machine 13.05 Alam 2. uge Production Purchase price per case Variable Overhead percase Total Variable costs per case Additional Fixed costs per year S5,000.00