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getsetgo
getsetgo, MBA
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Experience:  MBA from IIM Calcutta, Engineer, 8+ years of exp. at executive level
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Big Star Condiments CaseBig Star Condiments produces salsa

Customer Question

Big Star Condiments Case


Big Star Condiments produces salsa consumed primarily in North American restaurants. Given below is the projected income statement for the company for 2011.


























































Projected Income Statement (2011)
Sales (100,000 cases at $6.50 per case)
$650,000

Cost of goods sold:
Materials
$170,000

Labor
$205,000

Fixed manufacturing expenses
$40,000

Administrative and selling expenses:
Delivery
$25,000

Commissions
$40,000

Advertising
$10,000

Travel
$5,000

Fixed administrative and selling expenses
$12,000

Total costs
$507,000

Net income before taxes
$143,000


Create a report answering the following questions:



  • Complete the following table using a fully functional Microsoft Excel spreadsheet showing Marginal Revenue (MR), Marginal Cost (MC), Total Revenue (TR), Total Cost (TC), Total Variable Cost (TVC), Total Fixed Cost (TFC), and profits at all possible output levels.











































    Price


    Quantity


    Total Revenue


    Total Variable Cost


    Total Fixed Cost


    Total Cost


    Profit


    $8.00


    65,000


    $7.75


    75,000


    $7.50


    80,000


    $7.25


    90,000


    $7.00


    100,000


    $6.75


    115,000


    $6.50


    120,000



  • Using Excel, prepare a graph showing the breakeven point and any profit or loss at the current price of $6.50. Explain to the Big Star management the implications of this analysis.


  • What is the elasticity coefficient for each price between $6.50 and $7.50? Is the demand elastic or inelastic at these points?


  • On the basis of your calculations and the information above, what recommendations would you make to Big Star Condiments in terms of pricing and output levels?


Create your report in a 2- to 3-page Microsoft Word document.


 

Submitted: 5 years ago.
Category: Homework
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