Reference no: EM133252640

Question 1.

EasyFind, Inc. sells StraightShot golf balls for $19 per dozen, with a variable manufacturing cost of $11 per dozen. EasyFind is planning to introduce a lower priced ball, Duffer's Delite, that will sell for $10 per dozen with a variable manufacturing cost of $4 per dozen. The firm currently sells 48,127 StraightShot units per year and expects to sell 20,741 units of the new Duffer's Delight golf ball if it is introduced (1 unit = 12 golf balls packaged together). Management projects the fixed costs for launching Duffer's Delight golf balls to be $6,637.

What is the unit contribution ($) per one dozen StraightShot golf balls?

Question 2.

EasyFind, Inc. sells StraightShot golf balls for $23 per dozen, with a variable manufacturing cost of $12 per dozen. EasyFind is planning to introduce a lower priced ball, Duffer's Delite, that will sell for $14 per dozen with a variable manufacturing cost of $4 per dozen. The firm currently sells 48,432 StraightShot units per year and expects to sell 23,854 units of the new Duffer's Delight golf ball if it is introduced (1 unit = 12 golf balls packaged together). Management projects the fixed costs for launching Duffer's Delight golf balls to be $6,550.

What is the total yearly dollar contribution of Straight Shot balls prior to the launch of Duffer's Delight?

Question 3.

The local shampoo market is dominated by two brands: Clean Hair, which owns 59% of the market, and Sassy, which owns the remainder. A new brand, All-Over Shampoo, manufactured by the same makers of Sassy, is attempting to break into the shampoo market with an all-natural shampoo that they claim will strengthen hair as it is washed. The local shampoo market volume is 2,350 bottles per month. All-Over Natural Shampoo sells 410 bottles in their first month. The total market for shampoo is mature and no growth is expected to result from All-Over's entry. Variable costs for All-Over Shampoo are estimated at $2.71 per bottle, with a selling price of $5.06.

If management estimates fixed costs to be $8,500, what is the Break-Even Volume in bottles for All-Over Natural Shampoo?

Question 4.

In the last year, Bakers Score's Donuts and Sweets has sold, on average, 1,350 ''Fudgie'' brownies per week. This week they introduced fat-free brownies and sold 218 at a price of $4 each. They noticed the cannibalization rate of fat-free brownies on Fudgie brownies was 46%. Bakers Score's sells their "Fudgie" brownies for $3, with a variable cost of $1. The new Fat-Free Brownies have a variable cost of $2.

What is the weekly contribution ($) for Bakers Score's "Fudgie" brownie before the introduction of their Fat-Free Brownies?

Question 5.

In the last year, Bakers Score's Donuts and Sweets has sold, on average, 1,214 ''Fudgie'' brownies per week. This week they introduced fat-free brownies and sold 221 at a price of $3 each. They noticed the cannibalization rate of fat-free brownies on Fudgie brownies was 44%. Bakers Score's sells their "Fudgie" brownies for $3, with a variable cost of $1.2. The new Fat-Free Brownies have a variable cost of $2.

Assuming fixed costs for Fat-Free brownies are $350, how many of this new product will they have to sell to break even before cannibalization is taken into consideration?