Quince Products is a small company in southern California that makes jams and preserves. Recently, a sales rep from one of the companys suppliers suggested that Quince could increase its profitability by 40 percent if it introduced a second line of products, packaged fruit. She offered to do the analysis and show the company her assumptions.

When Quinces management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Quince that she could no longer advise them. Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales reps analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer.

QUINCE PRODUCTS Projected Income Statement For One Month Status Quo: % Increase Alternative: Single Product (Decrease) Two Products Difference $ 13,750 20 % $ 16,500 $ 2,750 1,800 2,340 540 Sales revenue Costs Material Labor Rent Depreciation Utilities Other Total costs Operating profit 30 % 25 % 0 % 20 % 20 % % 420 70 350 150 620 11,100 2,650 899 279 $ $ $ %