Standup Paddleboarding (SUP) has been growing in popularity over the past five years, and Superior SUP Ltd.
Question:
Standup Paddleboarding (SUP) has been growing in popularity over the past five years, and Superior SUP Ltd. has benefitted from the trend. The company produces SUP accessories: a board bag to shield the boards from UV rays when the board is stored outside, a lightweight aluminum paddle, and leashes worn around the ankle to ensure the paddleboard and rider are not separated. Sven Swift, the only shareholder of Superior SUP Ltd., has been very conservative in managing the growth of the business. Sven expects the favorable trend for paddleboarding to continue and is considering options to grow the business. In particular, Sven has been attending trade shows over the past year and has become aware of a growing demand for carbon paddles which are lighter and more responsive than the aluminum paddles used by most beginning riders.
Sven has scheduled a meeting with his senior managers to discuss options for the business. He has also compiled some key historical financial data regarding volume, sales prices, and production costs of the three products sold to date and carbon paddles that may be sold in the future. Planning was perfect in the prior year (as is only possible in a case study!) and the assumption is that there is no inventory at the beginning and end of the year. The prior-year data is presented below:
Principles of Auditing and Other Assurance Services
ISBN: 978-0078025617
19th edition
Authors: Ray Whittington, Kurt Pany