Two college students have come up with the same idea at the same time, and because they are unable to decide who should be CEO, they go into head-to- head competition. They do, however, build their business models quite differently. Elsa decides to hire assembly workers on payroll; Anna decides to outsource her assembly to a contract manufacturer which charges a fixed amount per piece manufactured. Here are the characteristics of each business: Elsa's cost structure Material costs $5/unit Salaries $13,000 per month Rent $36,000 per year Advertising $3,000 per month Admin Expenses $1,000 per month Anna's cost structure Material costs $5/unit Contract Manufacturer $10/unit Here are the characteristics of each business: Elsa's cost structure Material costs $5/unit Salaries $13,000 per month Rent $36,000 per year Advertising $3,000 per month Admin Expenses $1,000 per month Anna's cost structure Material costs $5/unit Contract Manufacturer $10/unit Costs Salaries $24,000 per year Rent $1,000 per month Advertising $3,000 per month Admin Expenses $1,000 per month 1 to Opoints I agree that I am taking this quiz on my own without any help or benefit from other individuals either in or outside of the class. The quiz is open note, so I may use my notes from the class. I also agree that if I have knowledge of other student's in the class not following this policy will inform the instructor immediately. If I'm found to not be following this policy I will receive a zero for this assignment and this will be reported to Cal Poly's Office of Instructional Integrity for further disciplinary action. True O False 2 1 point What is the breakeven number of units sold for Elsa? Type your answer... 3 3 -10 1 point What is the breakeven number of units for Anna's business? Type your answer... 4 1 point Assume that each company sells 1,000 units in the first month. What is the operating profit for Elsa's company that month (before taxes, etc.)? 4 1 point Assume that each company sells 1,000 units in the first month. What is the operating profit for Elsa's company that month (before taxes, etc.)? Type your answer... 5 5 1 point Assume that each company can sell 1,000 units in the first month. What is the operating profit for Anna's company that month (before taxes, etc.)? Type your answer... 6 1 point Now, assume that each company can sell 4,000 units in the first month. What is the operating profit for Elsa's company that month (before taxes, etc.)? Type your answer... 7 1 point Now, assume that each company can sell 4,000 units in the first month. What is the operating profit for Anna's company that month (before taxes, etc.)? Type your answer... 8 1 point Using the concepts we have discussed in class, how would you describe the key difference in the financial business model between Elsa and Anna's businesses? B IV AA- Ix 12pt Paragraph 50 max a 9 -10 1 point If you are not confident about on your early sales projections so there's a chance you may miss on your first 3 to 6 months of sales, which of the following best describes the business model you would prefer and why? Anna's, because her contract manufacturer is very efficient O Anna's, because she has a lower contribution per unit. Elsa's, because she has a higher contribution per O Anna's, because her contract manufacturer is very efficient O Anna's, because she has a lower contribution per unit. O Elsa's, because she has a higher contribution per unit. Elsa's, because her business model has larger upside profit potential O Anna's, because her business model has lower fixed costs. There is not enough information provided to answer this question. O Elsa's, because her breakeven units are lower than Anna's. 10 1 point You have a table manufacturing business. You need to buy plywood in bundles of 10 sheets to keep the price lower. The plywood is used for the table top and various inner support pieces. In your unit economics analysis, which of the following would your purchase of the plywood be? O Primary Sunk Investment Fixed Period Cost Variable Cost Sunk Cost O Scrap Two college students have come up with the same idea at the same time, and because they are unable to decide who should be CEO, they go into head-to- head competition. They do, however, build their business models quite differently. Elsa decides to hire assembly workers on payroll; Anna decides to outsource her assembly to a contract manufacturer which charges a fixed amount per piece manufactured. Here are the characteristics of each business: Elsa's cost structure Material costs $5/unit Salaries $13,000 per month Rent $36,000 per year Advertising $3,000 per month Admin Expenses $1,000 per month Anna's cost structure Material costs $5/unit Contract Manufacturer $10/unit Here are the characteristics of each business: Elsa's cost structure Material costs $5/unit Salaries $13,000 per month Rent $36,000 per year Advertising $3,000 per month Admin Expenses $1,000 per month Anna's cost structure Material costs $5/unit Contract Manufacturer $10/unit Costs Salaries $24,000 per year Rent $1,000 per month Advertising $3,000 per month Admin Expenses $1,000 per month 1 to Opoints I agree that I am taking this quiz on my own without any help or benefit from other individuals either in or outside of the class. The quiz is open note, so I may use my notes from the class. I also agree that if I have knowledge of other student's in the class not following this policy will inform the instructor immediately. If I'm found to not be following this policy I will receive a zero for this assignment and this will be reported to Cal Poly's Office of Instructional Integrity for further disciplinary action. True O False 2 1 point What is the breakeven number of units sold for Elsa? Type your answer... 3 3 -10 1 point What is the breakeven number of units for Anna's business? Type your answer... 4 1 point Assume that each company sells 1,000 units in the first month. What is the operating profit for Elsa's company that month (before taxes, etc.)? 4 1 point Assume that each company sells 1,000 units in the first month. What is the operating profit for Elsa's company that month (before taxes, etc.)? Type your answer... 5 5 1 point Assume that each company can sell 1,000 units in the first month. What is the operating profit for Anna's company that month (before taxes, etc.)? Type your answer... 6 1 point Now, assume that each company can sell 4,000 units in the first month. What is the operating profit for Elsa's company that month (before taxes, etc.)? Type your answer... 7 1 point Now, assume that each company can sell 4,000 units in the first month. What is the operating profit for Anna's company that month (before taxes, etc.)? Type your answer... 8 1 point Using the concepts we have discussed in class, how would you describe the key difference in the financial business model between Elsa and Anna's businesses? B IV AA- Ix 12pt Paragraph 50 max a 9 -10 1 point If you are not confident about on your early sales projections so there's a chance you may miss on your first 3 to 6 months of sales, which of the following best describes the business model you would prefer and why? Anna's, because her contract manufacturer is very efficient O Anna's, because she has a lower contribution per unit. Elsa's, because she has a higher contribution per O Anna's, because her contract manufacturer is very efficient O Anna's, because she has a lower contribution per unit. O Elsa's, because she has a higher contribution per unit. Elsa's, because her business model has larger upside profit potential O Anna's, because her business model has lower fixed costs. There is not enough information provided to answer this question. O Elsa's, because her breakeven units are lower than Anna's. 10 1 point You have a table manufacturing business. You need to buy plywood in bundles of 10 sheets to keep the price lower. The plywood is used for the table top and various inner support pieces. In your unit economics analysis, which of the following would your purchase of the plywood be? O Primary Sunk Investment Fixed Period Cost Variable Cost Sunk Cost O Scrap
