Reference no: EM132291673

New Product Pricing You assignment is to calculate the cost, selling price and profitability of a new, dry cereal product: Rootie Tootie Frooties. Costs are to be calculated for: Ingredients Packaging Direct Labor Overhead (supervision, maintenance, NRG, depreciation, admin & general, employee benefits, insurance, taxes) Annual sales forecast = 12,500,000 cases, each case containing 12 boxes; each box contains 10.5 ounces, net weight. Two (2) production lines. Production schedule = two (2) eight (8) hour shifts; 16 production hours per day. Five (5) days per week; M-F, 10 holidays (shut down), 52 weeks per year. No overtime. Cost of Ingredients per 10.5 ounce box of cereal: Wheat Flour: $0.078 Sugar: $0.021 Vitamins: $0.050 Coloring: $0.015 Cost of Packaging per 10.5 ounce box of cereal: Inner liner: $0.016 Decorated box: $0.098 Corrugated shipping case: $0.080 Glue: $.002 Hourly Labor required per shift to produce Rootie Tootie Frooties: 1 material handler 2 mixing tank operators 2 drier operators 2 quality insurers 4 carton erectors 2 caser operators 1 palletizer operator 1 take-away driver Average Labor Rate per Hour = $17.00 Overhead per case containing 12 boxes = $1.675 Gross Margin Target = 50% of sales revenues You are to calculate: 1. How many cases per minute must be produced per production line to meet the annual sales forecast? Disregard any inventory; assume JIT. 2. Total Cost Per Case containing 12 boxes (TC): 3. Selling Price per case to yield a 50% profit margin (SP) 4. Selling price per ounce of cereal 5. Pre-tax profit margin $ amount per case (SP – TC) 6. Pre-tax profit margin $ amount per year.