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Case 3-1 Brant Freezer Co.

Located in Fargo, N. Dakota

Company Facts: Industrial freezers (one size)

Product Facts: Market Facts: Distributed through public warehouses in Atlanta, Boston, Chicago, Denver, Los Angels, Portland, and St. Louis Fargo warehouse

1. When comparing performance during the first five months of 2010 with performance in 2009, which warehouse shows the most improvement?

2. When comparing performance during the first five months of 2010 with performance in 2009, which warehouse shows the poorest change in performance?

3. When comparisons are made among all eight warehouses, which one do you think does the best job for the Brant Company? What criteria did you use? why?

4 J. Q. is aggressive and is going to recommend that his father cancels the contract with one of the warehouses and give that business to a competing warehouse in the samecity. J. Q. feels that when word of this gets around, the other warehouses they use will shape up. Which of the seven should J.Q. recommend be dropped? why?

5. The year 2010 is nearly half over. J.Q. is told to determine how much the firm is likely to spend for warehousing at each of the eight warehouses for the last six months in 2010. Do his work for him.

6. When comparing the 2009 figures with the 2010 figures shown in the table, the amount budgeted for each warehouse in 2010 was greater than actual 2009 costs. How much of the increase is caused by increased volume of business (units shipped) and how much by inflation?

7. Use the 2009 income statement and balance sheet to complete a Strategic Profit Model for J.Q.

8. Holding all other information constant, what would be the effect on ROA for 2010 if warehousing costs declined 10 percent from 2009 levels?

2009

	Units Shipped		Warehouse Cost
Location	12 months	5 months	12 months	5 months
Atlanta	17431	4080	156830	35890
Boston	6920	3061	63417	27915
Chicago	28104	14621	246315	131618
Denver	3021	1005	28019	8600
Fargo	2016	980	16411	8883
LA	16491	11431	151975	109690
Portland	8333	4028	73015	36021
St. Louis	5921	2331	51819	23232

2010

	Units Shipped		Warehouse Cost
Location	12 months	5 months	12 months	5 months
Atlanta	18000	7035	178000	40228
Boston	7200	3119	7300	29416
Chicago	30000	15230	285000	141222
Denver	3100	1421	31000	14900
Fargo	2000	804	17000	9605
LA	17000	9444	176000	93280
Portland	9000	4600	85000	41616
St. Louis	8000	2116	56000	19191

Income Statement 2009
Sales	$4,003,450
Cost of Goods Sold	937,000
Gross Profit Margin	$3,066,450
Transportation Cost	$657,322
Warehousing Cost	$735,982
Inventory Carrying	567,987
Other Operating Costs	$345,876
Total Operation Costs	2,307,167
Earnings before interest and taxes	$759,283
Interest	$110,000
Taxes	$69,000
Net Income	$580,283

Balance Sheet 2009
Assets Liabilities Cash $706,034
Current Liabilities $1,678,589
Accounts Receivable $355,450
Long-term Debt $398,060
Inventory $1,590,435
Total Liabilities $2,076,649
Total Current Assets $2,651,919
Shareholders' Equity $1,378,326
Net Fixed Assets $803,056
Total Liabilities and Equity $3,454,975
Total Assets $3,454,975