Please solve the following question in detailed steps. Show ALL of the work. I will make sure to give a thumbs up. Thank you. The
Please solve the following question in detailed steps. Show ALL of the work. I will make sure to give a thumbs up. Thank you. The Tartar Company manufactures a number of different consumer products and consists of headquarters and three divisions: Divisions A, B, and C respectively. Each division competes vigorously with the others for funding.
You are the head of Division C. One of your design teams has come up with an idea to sell more toothpaste by repackaging it so that the tube is one-sixth wider than existing tubes. This, they reason will increase sales.
To test this packaging, your division successfully test-marketed the new tubes of toothpaste four months ago at a cost of $300,000.
The new toothpaste will be stored on a vacant floor of a huge warehouse belonging to your firm. The warehouse has three floors. Divisions A and B each use one floor for their own products. The floor you plan to use has always stood vacant. The total overhead on the warehouse is $120,000 a year for utilities, cleaning, and security. If your toothpaste is stored the overhead will rise to $150,000.
You have just received a fax forwarded to you from the head of Division A from a commercial realtor. The realtor believes that the vacant floor could be rented out starting next month for $20,000 a month.
If your toothpaste is produced and sold it will reduce sales of Division Bs slim-line toothbrushes by $ 600,000 a year since these toothbrushes are too narrow to hold your new toothpaste.
Finally, concerned about possible litigation, you will need to retain the services of the law firm of Dewey, Fleecum & Howe at a cost of $300,000 a year if the new toothpaste is introduced.
The facts above are relevant in thinking about what the cash flows for the new toothpaste line should be. In particular, please indicate on the lines below the dollar amounts the new toothpaste line should be charged for each of a to d and when (for example, you may write $10000 in year 4 on the line):
- The test marketing costs: _______________________
- Its share of the utility bill for the warehouse:________________________
- Any opportunity costs (please name these): _______________________
- Any other relevant costs: ____________________________________
Step by Step Solution
There are 3 Steps involved in it
Step: 1
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started