Question 2 of 2 -/5 After one year using the Top Cap system. Jonathan Smith, vice president for marketing at CSC Sports, is convinced that the company could sell even more baseball Caps. Apparently, the market demand for plain caps that are suitable for logo embroidery by corporations. Fraternities, and other groups is greater than current manufacturers can supply. The potential for C&C Sports to extend its sales of baseball caps beyond the athletic team market is huge The initial specifications for the Top Cap system required three workers per eight-hour shift to make up to 1,000 caps per day. Based on Initial demand forecasts, Jonathan asked Chad Davis, vice president for operations to make 240.000 caps in the first year the product was offered. Jonathon is convinced that C&C could sell at least 480,000 caps per year with the correct investment in marketing The Cash flow reflects making 240.000 caps Amount Cash Flow Cash Inflows Sales revenue $1.920,000 Cash Outflows Purchase and installation of Top Cap system 303.525 Purchase of direct materials 1.200,000 Direct labor 384,000 Cash Outflows Purchase and installation of TopCap system 303,525 1.200,000 Purchase of direct materials Direct labor Variable overhead 384,000 211,200 12.000 Variable selling expense Fixed expenses 50,000 Cash Flow Timing Amount 12% PV Factor Present Value Years 1-9 1.920,000 5.3282 $10.230,144.00 Sales revenue Direct materials Direct labor Years 1-9 (1.200,000) 5.3282 (6,393,840,00) Years 1-9 (384,000) 5.3282 (2,046,028.80) 5.3282 (1.125,315.84) Variable overhead Years 1-9 (211,200) (12,000) 5.3282 (63,938.40 Variable selling Years 1-9 102006 Years 1.9 (211200) 5.3282 (1.125 315 84) Variable overhead Variable selling Net present value Years 1-9 (12.000) 5.3282 (63.938.40 $601,020.96 (b) What additional one-time marketing cost could be justified to increase sales to meet anticipated demand? Remember that there are only 9 years of usable life remaining for the TopCap system and that C&C Sports uses a 12% discount rate. B T. G I. 1 . E 3 => O Words) Underline e Textbook and Media Attempts: 0 of 3 used Subinit Answer Save for Later