Reference no: EM131799929

Management Accounting Assignment

Case Study - Good Foods Limited

Question 1

You are a Finance manager at GF. Write a report to the management of GF regarding the new Quality brand. Your report should:

a) Identify the type of generic strategy option adopted by GF when it launches the new Quality brand in the Mainland, using any appropriate strategy model and compare it with the existing strategies adopted by GF;

b) Evaluate the appropriateness of the strategy to launch the new Quality brand in the Mainland, using a product life cycle model;

c) Based on 2013's operational estimates, calculate the contribution margins and profitability of the existing brands (Le. Organic, Premium (Regular) and Premium (Family). Explain your calculation where necessary;

d) Evaluate Geoffrey's suggestion to change the pricing of the existing brands;

e) Your calculation of the net present value (some of figures are included in Table) and the payback period of the investment in the new mixing and packaging machine; and

f) Explain your recommendation on the proposed launching of the new Quality brand and the matters to which you would alert the management.

Table A

	2014	2015	2016	2017	2018	2019
	$'000	$'000	$'000	$'000	$'000	$'000
Sales revenue	12,000	14,400	17,280	20,736	22,810	25,091
Production costs	6,600	7,920	9,504	11,405	12,545	13,800
Additional wages	500	500	500	500	500	500
Selling and marketing costs	840	1,008	1,210	1,452	1,597	1,756
Additional promotion expenses	2,000	2,000	-
Discount factor	0.870	0.757	0.658	0.572	0.497	0.432

GF is subject to income tax at a rate of 20%, payable at year end, and is entitled to tax depreciation allowance.

Question 2

Based on the new Quality brand's contribution to GJ's net profit for 2014 and 2015, explain your views on the principal reason for Geoffrey's strong reaction to the introduction of the new brand. From the perspective of professional ethics, do you consider Geoffrey's reaction appropriate? How would you advise the management of GF to resolve this issue?

Attachment:- Management-Accounting-Assignment.pdf