Question
The opener for Chapter 21 featured Tara Bosch and her business SmartSweets (SmartSweets.com). As described in the textbook: Concerned with the health effects of sugar,
The opener for Chapter 21 featured Tara Bosch and her business SmartSweets (SmartSweets.com). As described in the textbook:
Concerned with the health effects of sugar, Tara Bosch set out to make a sugar-free version of her favorite candy, gummy worms. Gummy candy is 99% sugar, explains Tara. So I had to start from scratch. Armed with a heavy-duty gummy bear mold and a strong belief she would succeed, Tara started her business, SmartSweets (SmartSweets.com).
I had no idea what I was doing, Tara admits. I spent months researching and trying recipes. After over 200 iterations, Tara developed a tasty prototype and obtained debt financing for her first manufacturing run. She won over her first retail customer through cold-calling and persistence.
In addition to product development, financing, and distribution, Tara had to measure and control the costs of using high-quality ingredients and a specialized manufacturing process. Understanding fixed and variable costs, and how to control them, to achieve break-even and make profits were critical for her start-up.
Tara focused on analyzing the relations between costs, volume, and profitcalled CVP analysis . Tara also uses data analytics in assessing the effectiveness of her companys digital marketing programs. We track key metrics like AOV (average order value) and net new subscribers, exclaims Tara.
SmartSweets continues to show enormous growth. Taras vision is to be the global leader in innovative candy products that kick sugar.
Sources: SmartSweets website , January 2021; CNBC.com , August 8, 2019; Forbes.com , May 29, 2017
Please discuss the following points as it relates to SmartSweets:
- Identify at least two fixed costs that do not change regardless of how much candy Taras company sells.
- If SmartSweets is growing, how could overly optimistic sales estimates hurt Taras business?
- Explain how cost-volume-profit analysis can help Tara manage her company.
The opener for Chapter 21 featured Tara Bosch and her business SmartSweets (SmartSweets.com). As described in the textbook:
Concerned with the health effects of sugar, Tara Bosch set out to make a sugar-free version of her favorite candy, gummy worms. Gummy candy is 99% sugar, explains Tara. So I had to start from scratch. Armed with a heavy-duty gummy bear mold and a strong belief she would succeed, Tara started her business, SmartSweets (SmartSweets.com).
I had no idea what I was doing, Tara admits. I spent months researching and trying recipes. After over 200 iterations, Tara developed a tasty prototype and obtained debt financing for her first manufacturing run. She won over her first retail customer through cold-calling and persistence.
In addition to product development, financing, and distribution, Tara had to measure and control the costs of using high-quality ingredients and a specialized manufacturing process. Understanding fixed and variable costs, and how to control them, to achieve break-even and make profits were critical for her start-up.
Tara focused on analyzing the relations between costs, volume, and profitcalled CVP analysis . Tara also uses data analytics in assessing the effectiveness of her companys digital marketing programs. We track key metrics like AOV (average order value) and net new subscribers, exclaims Tara.
SmartSweets continues to show enormous growth. Taras vision is to be the global leader in innovative candy products that kick sugar.
Sources: SmartSweets website , January 2021; CNBC.com , August 8, 2019; Forbes.com , May 29, 2017
Please discuss the following points as it relates to SmartSweets:
- Identify at least two fixed costs that do not change regardless of how much candy Taras company sells.
- If SmartSweets is growing, how could overly optimistic sales estimates hurt Taras business?
- Explain how cost-volume-profit analysis can help Tara manage her company.
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