..The case is... I cant post the case itself, ssid it's too long. This case is throughout the site for chegg

FOXY ORIGINALS: THE ONLINE EXPANSION Jessica Bond wrote this case under the supervision of Elizab...

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Questions to answer:

Foxy Originals

This is an excellent case to learn and utilize Cost-Volume-Profit (CVP) Analysis

To work this case you need to know how to calculate Break-Even, Target Profit and Margin of Safety. The text provides the formulas, but how do you implement the formulas in a real-world situation?

There are two potential strategies to consider: Trade Show, and On-Line

I. Trade Show

Things you will need to consider or calculate:

Investment =

a. They need a booth for their trade show presence; Cost; useful life; depreciation

Fixed Costs

Registration =

Shipping Costs (for the booth) =

Travel Expenses (for the two partners) =

Promotional materials and samples =

Depreciation expense (from the above investment) =

Average trade show order

Necklace selling price and number of units =

Earrings selling price and number of units =

Contribution Margin ($ and %)

Necklace per unit and per order =

Earrings per unit and per order =

Total per order =

Estimated orders per show

High estimate and low estimate =

Reorders: 50% reorder twice a year =

Total per order =

Calculations needed

Break-even units (orders) =

Break-even sales (dollars) =

Target profit units (orders) =

Target Profit sales (dollars) =

Margin of safety (for high and low estimate) =

Prepare a contribution margin format income statement =

On-Line

Things you will need to consider or calculate:

Investment

Do they need a booth if they go on-line? Yes or No

Fixed Costs

Assume the same budget as trade shows $93,000

Cost per click $1.05 (given) =

Divide $93,000 by $1.05 to get number of clicks (visits to website) =

3% to 5% of visitors will make a purchase =

Calculate low estimate and high estimate of orders =

Average on-line order

Necklace selling price and number of units =

Earrings selling price and number of units =

Total selling price and number of units =

Contribution Margin ($ and %)

Necklace per unit and per order =

Earrings per unit and per order =

Total per order =

Be sure to calculate the $ and the %! =

Estimated orders on-line

High estimate and low estimate =

Total per order =

High estimate and low estimate of sales =

Calculations needed

Break-even units (orders) =

Break-even sales (dollars) =

Target profit units (orders) =

Target Profit sales (dollars) =

Margin of safety (for high and low estimate) =

Prepare a contribution margin format income statement =

Decision

You have the quantitative data you need

Dont forget the qualitative data (read the case!)

Note: Doing both is not an option!

Support your decision with quantitative and qualitative data!