Table 1: Chicken Sensation Feasibility Data Pounds per Case Bags per Che Panel : Sales and Marketing Date . 15 pcted poundsperate 12 Expected amber of bugspercase Formented Sales Anal Sales Cases sales forecast for the first th Sales growth permath for the first year Number of this year Peaceat possible sales forecast me Cases Sold 65.000 15.000 12 Fest Month Sales Vol Montily Sales Growth You Montes per year Year 1 Sales Forecast Enor Percent December Sales Volume Fast Year Sales Volum Anul Sales Volume afer Year! Sales Price to Retailers (per bag) Coupon Costs 5 per bag) Commesson (percent) $ Sain Pee Coupon Cous C Bale Per Car 3.00 Based on salespeel bag and berat bagscase 0.20 Bon coupes per bag and number of tees per case 600 Percentage of sales pead to books Siaming Package Inge Sale Salentes Total Cont (5) Useful Life Annual 6.000.000 Expected song costs to be spended over a yes 2.000.000 Expected packaging design costs par the int you 200.000 Expected manual additional sales and detag salunes to be paid Song Costs Package Desen Costs Sales Salines 5 5 $ Min Protection and Cow Date Row Marwil PC Pri CIB PHONE Check 20.0095 20000 Expected cost a cluicken per Chicken Smations pound Vegetables 65.00% 5 05000 Epected cost of veetables Chicken Sie per pound Spartak 15.00 0.1500 Expected cost of spataris per Click Saation pound Total (Must be 100 percent) 10000 Totalt be 100 percent Weighted Avenge Raw Matlost Wehted average cost per pound of Chick Sections Pounds per Case Total Raw Materal Cost per Case Chicken Sensenons cost per case as pounds percase) Parka C Cost Bag Box) Ore P+ ( Bags Based on pe bag and underfbas perce 0.30 Espected price per box with 1 box per case Total Packars Costa Case Total packaging costs of bags and bones per case Total Duvet Material Costs per Chie Total Clocker trust and packag cost 0:30 Cost Perth) 030 0.00 Duct Labor Venable Manufactung Overhead Total Covers Cost per Case Total Vueble Product Cost per se Conversion or Les Case Per Cases) Based on labor costs per pound and number of pounds per me Based on varude overed per pound and amber of pounds perce Total conversa cost percase Total deretter and coucos per case Retrofit Cews Anual Lise Derectie Total Costa 2.000.000 Retrofit Costs Epected retrofit costs and depreciable Table 2: Sensitivity Analysis Levels Parson Vegetable Company Sensitivity Analysis Levels (Percent of Original Projections) Chicken Sensations Sales Vohune Case Forecast Sales Price per Bag Cost per Pound of Chicken Pessimistic 75.00% 90.00% 112.50% Original 100.00% 100.00% 100.00% Optimistic 125.00% 110.00% 87.50% Table 3: Reported Sensitivity Analysis Results Parson Vegetable Company Sensitivity Analysis Results Chicken Sensations Pessimistic Original Optimistic Operating Income Contribution Margin Ratio Profit Margin Breakeven Sales (in Cases) Margin of Safety (in Cases) Margin of Safety Ratio PROJECT REQUIREMENTS: Put yourself in Vicki Hoerning, the chief financial analyst's shoes, prepare a business memo addressed to Richard Lawson, CEO of Parson Foods Vegetable Company (PFVC). Your memo should: 1. Provide recommendations to Mr. Lawson regarding whether to "hatch Chicken Sensations? To support your recommendations, prepare an economic feasibility analysis that will guide PFVC's decision on whether to launch Chicken Sensations. 2. Identify factors that could generate risk in introducing Chicken Sensations (not limited to the ones already discussed in the case). Discuss what actions could be taken to handle these foreseen risks? 3. Describe what responsibilities and compliances considerations are present and how do these responsibilities and compliances influence the decision to launch Chicken Sensations? Discuss how important is accurate management accounting analyses to a company's sustainability? 4. Discuss your overall recommendations for PFVC's management regarding the use of CVP analysis to evaluate or control financial performance? Identify other avenues for increasing PFVC's profitability. What suggestions could you provide to assist the company in improving its lagging financial performance? Table 1: Chicken Sensation Feasibility Data Pounds per Case Bags per Che Panel : Sales and Marketing Date . 15 pcted poundsperate 12 Expected amber of bugspercase Formented Sales Anal Sales Cases sales forecast for the first th Sales growth permath for the first year Number of this year Peaceat possible sales forecast me Cases Sold 65.000 15.000 12 Fest Month Sales Vol Montily Sales Growth You Montes per year Year 1 Sales Forecast Enor Percent December Sales Volume Fast Year Sales Volum Anul Sales Volume afer Year! Sales Price to Retailers (per bag) Coupon Costs 5 per bag) Commesson (percent) $ Sain Pee Coupon Cous C Bale Per Car 3.00 Based on salespeel bag and berat bagscase 0.20 Bon coupes per bag and number of tees per case 600 Percentage of sales pead to books Siaming Package Inge Sale Salentes Total Cont (5) Useful Life Annual 6.000.000 Expected song costs to be spended over a yes 2.000.000 Expected packaging design costs par the int you 200.000 Expected manual additional sales and detag salunes to be paid Song Costs Package Desen Costs Sales Salines 5 5 $ Min Protection and Cow Date Row Marwil PC Pri CIB PHONE Check 20.0095 20000 Expected cost a cluicken per Chicken Smations pound Vegetables 65.00% 5 05000 Epected cost of veetables Chicken Sie per pound Spartak 15.00 0.1500 Expected cost of spataris per Click Saation pound Total (Must be 100 percent) 10000 Totalt be 100 percent Weighted Avenge Raw Matlost Wehted average cost per pound of Chick Sections Pounds per Case Total Raw Materal Cost per Case Chicken Sensenons cost per case as pounds percase) Parka C Cost Bag Box) Ore P+ ( Bags Based on pe bag and underfbas perce 0.30 Espected price per box with 1 box per case Total Packars Costa Case Total packaging costs of bags and bones per case Total Duvet Material Costs per Chie Total Clocker trust and packag cost 0:30 Cost Perth) 030 0.00 Duct Labor Venable Manufactung Overhead Total Covers Cost per Case Total Vueble Product Cost per se Conversion or Les Case Per Cases) Based on labor costs per pound and number of pounds per me Based on varude overed per pound and amber of pounds perce Total conversa cost percase Total deretter and coucos per case Retrofit Cews Anual Lise Derectie Total Costa 2.000.000 Retrofit Costs Epected retrofit costs and depreciable Table 2: Sensitivity Analysis Levels Parson Vegetable Company Sensitivity Analysis Levels (Percent of Original Projections) Chicken Sensations Sales Vohune Case Forecast Sales Price per Bag Cost per Pound of Chicken Pessimistic 75.00% 90.00% 112.50% Original 100.00% 100.00% 100.00% Optimistic 125.00% 110.00% 87.50% Table 3: Reported Sensitivity Analysis Results Parson Vegetable Company Sensitivity Analysis Results Chicken Sensations Pessimistic Original Optimistic Operating Income Contribution Margin Ratio Profit Margin Breakeven Sales (in Cases) Margin of Safety (in Cases) Margin of Safety Ratio PROJECT REQUIREMENTS: Put yourself in Vicki Hoerning, the chief financial analyst's shoes, prepare a business memo addressed to Richard Lawson, CEO of Parson Foods Vegetable Company (PFVC). Your memo should: 1. Provide recommendations to Mr. Lawson regarding whether to "hatch Chicken Sensations? To support your recommendations, prepare an economic feasibility analysis that will guide PFVC's decision on whether to launch Chicken Sensations. 2. Identify factors that could generate risk in introducing Chicken Sensations (not limited to the ones already discussed in the case). Discuss what actions could be taken to handle these foreseen risks? 3. Describe what responsibilities and compliances considerations are present and how do these responsibilities and compliances influence the decision to launch Chicken Sensations? Discuss how important is accurate management accounting analyses to a company's sustainability? 4. Discuss your overall recommendations for PFVC's management regarding the use of CVP analysis to evaluate or control financial performance? Identify other avenues for increasing PFVC's profitability. What suggestions could you provide to assist the company in improving its lagging financial performance