Graceful Glow Ltd. was founded in 2005 in Spain by hair care expert Alejandro Amour Graceful...
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Graceful Glow Ltd. was founded in 2005 in Spain by hair care expert Alejandro Amour Graceful and is now established in more than 60 countries globally. The brand has consistently crafted haircare products with a strong commitment to ecological responsibility. Graceful's "Pure Radiance" brand is dedicated to sustainable beauty and embarked on its eco-friendly journey in 2019 to make a positive impact on society. In 2023, Graceful Glow Ltd. introduced the "EcoWave" Shampoo Bar formulations. These bars utilize Graceful's cutting-edge technology to deliver liquid-like cleansing without the use of plastic packaging. The bars are free from preservatives, silicon, soap, and dyes. The user-friendly shampoo bars offer up to 3 months of usage and are suitable for the entire family, starting from the age of 5. As of October 16th, 2023, Harper Smith, the Vice-President of Marketing for Graceful Glow Ltd., is evaluating the market potential of the EcoWave Shampoo Bar, set to launch on January 1, 2024. She aims to analyze the financial performance of the new product for its first three years in the market (2024, 2025, and 2026) for an upcoming meeting with her CEO, Alejandro Amour Graceful. Here is what she knows: 1. The market demand for the EcoWave Shampoo Bar in 2024 is 800,000 households. 2. Each household is expected to purchase 3 units per year. 3. The anticipated market share for the first year is 22%. 4. The average selling price will be $15 per unit in 2024. 5. The variable direct labor cost is projected to be 5% of the average selling price. 6. Variable direct material and variable packaging costs are forecasted at $4 per unit. 7. Fixed marketing costs are $180,000 per year. 8. Fixed manufacturing costs are $350,000 per year. After a successful launch year (2024), Harper forecasts a growth rate of 8% from 2024 to 2025. Consequently, there will be an 8% increase in the selling price, market share, and all costs (both fixed and variable, both $ and %) for the year 2025. The market size is expected to remain unchanged. Harper is confident that for 2026, maintaining the same figures as 2025 but increasing the fixed marketing cost by 50% (from the 2025 figure) will result in a 20% growth in market share (from the 2025 figure). Prepare a financial analysis for 2024, 2025, and 2026 in a CVP income statement format. Also, calculate the breakeven point in units and in dollars. Based on your calculations, what should Harper Smith communicate to the CEO of the company? Graceful Glow Ltd. was founded in 2005 in Spain by hair care expert Alejandro Amour Graceful and is now established in more than 60 countries globally. The brand has consistently crafted haircare products with a strong commitment to ecological responsibility. Graceful's "Pure Radiance" brand is dedicated to sustainable beauty and embarked on its eco-friendly journey in 2019 to make a positive impact on society. In 2023, Graceful Glow Ltd. introduced the "EcoWave" Shampoo Bar formulations. These bars utilize Graceful's cutting-edge technology to deliver liquid-like cleansing without the use of plastic packaging. The bars are free from preservatives, silicon, soap, and dyes. The user-friendly shampoo bars offer up to 3 months of usage and are suitable for the entire family, starting from the age of 5. As of October 16th, 2023, Harper Smith, the Vice-President of Marketing for Graceful Glow Ltd., is evaluating the market potential of the EcoWave Shampoo Bar, set to launch on January 1, 2024. She aims to analyze the financial performance of the new product for its first three years in the market (2024, 2025, and 2026) for an upcoming meeting with her CEO, Alejandro Amour Graceful. Here is what she knows: 1. The market demand for the EcoWave Shampoo Bar in 2024 is 800,000 households. 2. Each household is expected to purchase 3 units per year. 3. The anticipated market share for the first year is 22%. 4. The average selling price will be $15 per unit in 2024. 5. The variable direct labor cost is projected to be 5% of the average selling price. 6. Variable direct material and variable packaging costs are forecasted at $4 per unit. 7. Fixed marketing costs are $180,000 per year. 8. Fixed manufacturing costs are $350,000 per year. After a successful launch year (2024), Harper forecasts a growth rate of 8% from 2024 to 2025. Consequently, there will be an 8% increase in the selling price, market share, and all costs (both fixed and variable, both $ and %) for the year 2025. The market size is expected to remain unchanged. Harper is confident that for 2026, maintaining the same figures as 2025 but increasing the fixed marketing cost by 50% (from the 2025 figure) will result in a 20% growth in market share (from the 2025 figure). Prepare a financial analysis for 2024, 2025, and 2026 in a CVP income statement format. Also, calculate the breakeven point in units and in dollars. Based on your calculations, what should Harper Smith communicate to the CEO of the company?
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Lets prepare a financial analysis for 2024 2025 and 2026 in a CVP CostVolumeProfit income statement format Well also calculate the breakeven point in units and in dollars Here are the details for each ... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
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