The ability to price, market, and provide products and services helps to maximize the profit of a company. Learning these skills will help you improve the overall functioning of the company and your skills as a business owner, professional, and/or student. Read the following scenario and complete the questions posed below. Scenario Mirabel Manufacturing is a small but growing company that manufactures and sells marine sonar equipment. They employee a national sales force and their primary customers are marine retailers and beat dealerships. The company has expanded over the last 5 years and Paul Mirabel, the founder and CEO has become concerned that he no longer has a clear picture of their cost structure. He calls his CFO, Mary Jane Montgomery in for a meeting "Mary Jane, I am concerned that I am not current on our cost structure and how that is impacting our bottom line." Paul begins. " Well, Paul, the company has grown considerably over the past 5 years, so I'm not surprised that you feel a little disconnected with how things are going." Mary Jane replied. She continued in fact, I've been meaning to talk to you about a couple of big items such as increasing the sales commission to 15 We've lost two of our best account managers in the last 9 months. It seems like we are behind the curve paying only 12x on gross What do you mean we are behind the curve, Paul replied angrily. "We have always been the leader in every aspect of our business." "Well, that may have been the case in the past, Paul, but frankly we need to step up our compensation package to stay competitive," Mary Jane replied. She continued. "And that's not everything. I met with Frank Jacobs from marketing and he said we need to have a bigger presence at the trade show in March. He told me he would need about 5650.000 added to the marketing budget to support new marketing materials." "Come on, Mary Jane, how can we do that when we are going to have to increase commission!" He continued, "I spoke with Dan Clark in production and he indicated that we have two pieces of equipment that need to be replaced by the end of the quarter and that's going to set us back almost $1.2 million." Mary Jane shook her head. "Paul, I hate to bring this up but while we are talking costs, but Bob in purchasing stopped by the office and dropped off some revised cost information - it looks like several of our suppliers are talking about significant price increases by the end of the year." Paul slumped in his chair. "This is a mess, Mary Jane. Increasing commissions, new equipment materials price increases and marketing expenses all at once. Even if Frank Mallow is correct that we should see a lo increase in sales for the coming year, just don't see how we can make this work. We have to maintain enough profit to keep the shareholders happy and I can't sleep when we dip below that $2 million margin of safety." Mary Jane gathered up her papers, "Before you get too distressed, let me put together some figures and let's see what this looks like on paper, get back to you by the end of the week. In the meantime, stay positive, we'll find the best solution." The following income and cost data for Mirabel is provided Mirabel Manufacturing Budgeted Income Statement For the Year Ending December 31 Sales 36,750,000 Cost of goods sold: Variable 13,300,000 Fixed 59,300,000 Gross Margin 14,150.000 Selling & Administrative Commissions 54,410,000 Fixed Marketing Expenses $ 1.350.000 Fixed Administrative $ 6,000,000 Net Operating Income 52,390,000 Model 101 Model 201 Model 301 Normal Annual Sales Volume 16,000 19,000 11,000 Unit Selling Price Variable expense per unit $650 $250 $750 $200 $ 1.100 $500 Report Prepare a report from Mary Jane to Don explaining how these changes will affect Mirabel's overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company's break-even point, but also the desired margin of safety The ability to price, market, and provide products and services helps to maximize the profit of a company. Learning these skills will help you improve the overall functioning of the company and your skills as a business owner, professional, and/or student. Read the following scenario and complete the questions posed below. Scenario Mirabel Manufacturing is a small but growing company that manufactures and sells marine sonar equipment. They employee a national sales force and their primary customers are marine retailers and beat dealerships. The company has expanded over the last 5 years and Paul Mirabel, the founder and CEO has become concerned that he no longer has a clear picture of their cost structure. He calls his CFO, Mary Jane Montgomery in for a meeting "Mary Jane, I am concerned that I am not current on our cost structure and how that is impacting our bottom line." Paul begins. " Well, Paul, the company has grown considerably over the past 5 years, so I'm not surprised that you feel a little disconnected with how things are going." Mary Jane replied. She continued in fact, I've been meaning to talk to you about a couple of big items such as increasing the sales commission to 15 We've lost two of our best account managers in the last 9 months. It seems like we are behind the curve paying only 12x on gross What do you mean we are behind the curve, Paul replied angrily. "We have always been the leader in every aspect of our business." "Well, that may have been the case in the past, Paul, but frankly we need to step up our compensation package to stay competitive," Mary Jane replied. She continued. "And that's not everything. I met with Frank Jacobs from marketing and he said we need to have a bigger presence at the trade show in March. He told me he would need about 5650.000 added to the marketing budget to support new marketing materials." "Come on, Mary Jane, how can we do that when we are going to have to increase commission!" He continued, "I spoke with Dan Clark in production and he indicated that we have two pieces of equipment that need to be replaced by the end of the quarter and that's going to set us back almost $1.2 million." Mary Jane shook her head. "Paul, I hate to bring this up but while we are talking costs, but Bob in purchasing stopped by the office and dropped off some revised cost information - it looks like several of our suppliers are talking about significant price increases by the end of the year." Paul slumped in his chair. "This is a mess, Mary Jane. Increasing commissions, new equipment materials price increases and marketing expenses all at once. Even if Frank Mallow is correct that we should see a lo increase in sales for the coming year, just don't see how we can make this work. We have to maintain enough profit to keep the shareholders happy and I can't sleep when we dip below that $2 million margin of safety." Mary Jane gathered up her papers, "Before you get too distressed, let me put together some figures and let's see what this looks like on paper, get back to you by the end of the week. In the meantime, stay positive, we'll find the best solution." The following income and cost data for Mirabel is provided Mirabel Manufacturing Budgeted Income Statement For the Year Ending December 31 Sales 36,750,000 Cost of goods sold: Variable 13,300,000 Fixed 59,300,000 Gross Margin 14,150.000 Selling & Administrative Commissions 54,410,000 Fixed Marketing Expenses $ 1.350.000 Fixed Administrative $ 6,000,000 Net Operating Income 52,390,000 Model 101 Model 201 Model 301 Normal Annual Sales Volume 16,000 19,000 11,000 Unit Selling Price Variable expense per unit $650 $250 $750 $200 $ 1.100 $500 Report Prepare a report from Mary Jane to Don explaining how these changes will affect Mirabel's overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company's break-even point, but also the desired margin of safety