x2 A A I Normal T No Spac.. nt Paragraph 1 I 2 3 4 I 5 I 6 Styles Team C's Assignment The owners have been conducting strategic planning discussions on the future of Loddy Doddy and are considering two major acquisitions. Option 1 I Should Loddy Doddy purchase Amber's Grill N More? Lenny and Denny were approached by management of Amber's Grill N More about whether they would be interested in buying their four underperforming restaurants and operate them under the "AG&M Entertainment" name. The restaurant is known for its signature steak burgers; but, has struggled to expand its menu to compete with other like restaurants options available to consumers in the Mid-West region (primarily heavy markets within Illinois and and Ohio). Management believes adding Loddy Doddy's dessert offerings to the menu would make the restaurants an appealing destination for both dinner and dessert. For this reason, Lenny and Denny needs your team to review the 2015 performance report for the chain (see next page). It is estimated that average price per meal would increase 15% with the new desserts and require an investment of $11 million. Option 2 Should Loddy Doddy purchase and operate a new factory? There have been talks between the owners to purchase and operate a production facility in Tupelo, Mississippi, which would increase current production volume. There is an existing food production facility well positioned in Tupelo as it is located BUSN 6070 Management Accounting Course Project Compatibility Mode- Saved to this PC Sign in w Design Layout References Mailings Review View Help O Search 11 A A Aa A AaBbCcDc AaBbCcDc Aa BbC J ab A 1 No Spac... Heading 1 I Normal X. A Font Paragraph Styles 1 2 3 4 I 5 I I 6 / Option 2 Should Loddy Doddy purchase and operate a new factory? There have been talks between the owners to purchase and operate a production facility in Tupelo, Mississippi, which would increase current production volume. There is an existing food production facility well positioned in Tupelo as it is located on distribution routes and surrounded by a new market of restaurants and grocery chains. The asking price for the factory is $8.5 million and includes be used by Loddy Doddy; but, would also require an investment of $3 million in additional equipment with a 10-year average life to provide the same capacity as the current factory. It would take about 8 months to get the new plan up and running. Estimated sales for the first three years after it opens are $5 million, $7.5 million, and $12 million, respectively. Variable expenses are expected to have about the equi ent. About half of the chinery coul same behavior and relationship to sales as the current facility. Fixed expenses would also be about the same amount per month as the current factory. > !!! lili Sign in BUSN 6070 Management Accounting Course Project Compatibility Mode Saved to this PC O Search Help Design References View Mailings Review Draw Layout Insert 11 A Aa A A AaBbCcDc AaBbCcDc AaBbC Calibri 1 Normal 1 No Spac.. Heading 1 A I U A B ab X. Styles Paragraph Font I 6 1 2 I 3 I 4 I Amber's Grill N More 2014-2015 Peformance Report 2014 Actual 2015 Actual Customer Volume Net Sales Cost of Sales 1,172,600 1,215,500 11,575,784 $ 11,559,372 6,974,227 $ Food 6,999,049 Total Labor 1,100,528 1,094,676 8,068,903 S Cost of Sales 8,099,577 Gross Profit 3,506,881 $ 3,459,795 Other Operating Expenses 2,497,732 2,445,119 1,009,150 $ Operating Profit 1,014,676 Other Data: Average Operating Assets Food Costs: %variable Total Labor Costs: %variable Other Operating Expenses: %variable 8,250,000 $ 8,250,000 100% 100% 75% 65% 75% 65% Your Team's Assignment !!lil Aa P 11 A A a AaBbCcDc AaBbCcDc AaBb ibri Heading Normal 1 No Spac... x A Av I U ab Styles Font Paragraph 1 3 4 I 5 I 6 . 2 Your Team's Assignment Use the following as a guide when making your recommendations: Assess performance of Amber's Grill N More in terms of expected return on investment (ROI) and residual income. Be certain to include in your assessment what you believe to be the major differences between profits from 2014 to 2015? What does this analysis suggest for Loddy 1. Doddy? Assess the viability and profitability for the Tupelo production facility including its expected ROI 2. and residual income. What does this analysis suggest for Loddy Doddy? Are there any strategic, technical and risk factors that may be relevant to this decision? What does this analysis suggest for Loddy Doddy? 3. 4. What action do you recommend for Loddy Doddy at this time? NOTE: Each team will give a 10-15 minute presentation over their assigned sections of the project on the date noted by the instructor. Be certain to dress like you mean business as Loddy Doddy owners are eager to hear your analysis and recommendations to enhance operations. Management also wants to get to know each member of your team, so each person on the team should be prepared to participate equally! re to search Mi 97% x2 A A I Normal T No Spac.. nt Paragraph 1 I 2 3 4 I 5 I 6 Styles Team C's Assignment The owners have been conducting strategic planning discussions on the future of Loddy Doddy and are considering two major acquisitions. Option 1 I Should Loddy Doddy purchase Amber's Grill N More? Lenny and Denny were approached by management of Amber's Grill N More about whether they would be interested in buying their four underperforming restaurants and operate them under the "AG&M Entertainment" name. The restaurant is known for its signature steak burgers; but, has struggled to expand its menu to compete with other like restaurants options available to consumers in the Mid-West region (primarily heavy markets within Illinois and and Ohio). Management believes adding Loddy Doddy's dessert offerings to the menu would make the restaurants an appealing destination for both dinner and dessert. For this reason, Lenny and Denny needs your team to review the 2015 performance report for the chain (see next page). It is estimated that average price per meal would increase 15% with the new desserts and require an investment of $11 million. Option 2 Should Loddy Doddy purchase and operate a new factory? There have been talks between the owners to purchase and operate a production facility in Tupelo, Mississippi, which would increase current production volume. There is an existing food production facility well positioned in Tupelo as it is located BUSN 6070 Management Accounting Course Project Compatibility Mode- Saved to this PC Sign in w Design Layout References Mailings Review View Help O Search 11 A A Aa A AaBbCcDc AaBbCcDc Aa BbC J ab A 1 No Spac... Heading 1 I Normal X. A Font Paragraph Styles 1 2 3 4 I 5 I I 6 / Option 2 Should Loddy Doddy purchase and operate a new factory? There have been talks between the owners to purchase and operate a production facility in Tupelo, Mississippi, which would increase current production volume. There is an existing food production facility well positioned in Tupelo as it is located on distribution routes and surrounded by a new market of restaurants and grocery chains. The asking price for the factory is $8.5 million and includes be used by Loddy Doddy; but, would also require an investment of $3 million in additional equipment with a 10-year average life to provide the same capacity as the current factory. It would take about 8 months to get the new plan up and running. Estimated sales for the first three years after it opens are $5 million, $7.5 million, and $12 million, respectively. Variable expenses are expected to have about the equi ent. About half of the chinery coul same behavior and relationship to sales as the current facility. Fixed expenses would also be about the same amount per month as the current factory. > !!! lili Sign in BUSN 6070 Management Accounting Course Project Compatibility Mode Saved to this PC O Search Help Design References View Mailings Review Draw Layout Insert 11 A Aa A A AaBbCcDc AaBbCcDc AaBbC Calibri 1 Normal 1 No Spac.. Heading 1 A I U A B ab X. Styles Paragraph Font I 6 1 2 I 3 I 4 I Amber's Grill N More 2014-2015 Peformance Report 2014 Actual 2015 Actual Customer Volume Net Sales Cost of Sales 1,172,600 1,215,500 11,575,784 $ 11,559,372 6,974,227 $ Food 6,999,049 Total Labor 1,100,528 1,094,676 8,068,903 S Cost of Sales 8,099,577 Gross Profit 3,506,881 $ 3,459,795 Other Operating Expenses 2,497,732 2,445,119 1,009,150 $ Operating Profit 1,014,676 Other Data: Average Operating Assets Food Costs: %variable Total Labor Costs: %variable Other Operating Expenses: %variable 8,250,000 $ 8,250,000 100% 100% 75% 65% 75% 65% Your Team's Assignment !!lil Aa P 11 A A a AaBbCcDc AaBbCcDc AaBb ibri Heading Normal 1 No Spac... x A Av I U ab Styles Font Paragraph 1 3 4 I 5 I 6 . 2 Your Team's Assignment Use the following as a guide when making your recommendations: Assess performance of Amber's Grill N More in terms of expected return on investment (ROI) and residual income. Be certain to include in your assessment what you believe to be the major differences between profits from 2014 to 2015? What does this analysis suggest for Loddy 1. Doddy? Assess the viability and profitability for the Tupelo production facility including its expected ROI 2. and residual income. What does this analysis suggest for Loddy Doddy? Are there any strategic, technical and risk factors that may be relevant to this decision? What does this analysis suggest for Loddy Doddy? 3. 4. What action do you recommend for Loddy Doddy at this time? NOTE: Each team will give a 10-15 minute presentation over their assigned sections of the project on the date noted by the instructor. Be certain to dress like you mean business as Loddy Doddy owners are eager to hear your analysis and recommendations to enhance operations. Management also wants to get to know each member of your team, so each person on the team should be prepared to participate equally! re to search Mi 97%