The Quisine baking company has a reputation for producing gourmet cocoa baking powder, and for many years
Question:
The Quisine baking company has a reputation for producing gourmet cocoa baking powder, and for many years has sold old two brands: “Premium” and “Regular”. During this past year they launched a low-end version of their baking powder called “Budget”. The Budget brand requires less processing time, and is based on a mix of lower quality cocoa and cocoa-like raw ingredients. While consumers initially gave mixed reviews of the new Budget brand, Quisine Baking Company sold 200,000 boxes during the year. Financial information for the year is as follows:
BUDGET | Selling Price per box (in $) | Variable Cost per box (in $) | Boxes Sold (in boxes) |
Budget | 2.00 | 1.02 | 0 |
Regular | 3.00 | 1.40 | 200,000 |
Premium | 5.00 | 3.00 | 300,000 |
ACTUAL | Selling Price per box (in $) | Variable Cost per box (in $) | Boxes Sold (in boxes) |
Budget | 2.00 | 1.00 | 200,000 |
Regular | 3.00 | 1.39 | 190,000 |
Premium | 5.00 | 3.03 | 250,000 |
The total market size was estimated to be 5 million boxes. During the year, there were 6 million boxes sold.
Required:
- Calculate the Sales Mix, Sales Quantity, and Sales Volume Variance for each product, and the three products as a total.
- Calculate the Market Share and Market Size variance.
- Should they continue to make the Budget brand? This assessment should be based on both qualitative and quantitative factors such as how the Budget brand affected sales of other products.
College Mathematics for Business Economics Life Sciences and Social Sciences
ISBN: 978-0321614001
12th edition
Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen