The Orchard Beverage Company produces healthy alternatives to widely available soft drinks. Orchard makes its high-quality...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Orchard Beverage Company produces healthy alternatives to widely available soft drinks. Orchard makes its high-quality beverages with fresh fruit (bought at the peak of the season, when the fruit is juiciest, plentiful, and least expensive). These drinks are made with no preservatives in small batches. Over the company's first five years, sales have been brisk, with cases selling out well before forecasted. The owners of the company are considering rapid expansion of its production facilities, so that it can better respond to demand and possibly expand beyond its current regional sales territory. Before the company seriously considers expansion, the owners turn to you, the Orchard CFO/controller, to build a spreadsheet that will help owners better understand company profitability. Furthermore, considering the volatility of fruit prices, the owners also need to the ability to perform sensitivity analysis so that owners can try "what if" scenarios with respect to the price of fruit and the percentage of fruit used in each of its two products. Orchard's drink-ologists have experimented with blends and have found a certain mix can be used as a substitute in its drinks. A mix of fresh pear and grapefruit is used as a substitute when supplies of fresh lemons or limes are too few or too costly. For its Mixed Berries drink, Orchard uses a blend of grapes as a substitute when necessary. The results of taste tests suggest that few consumers will detect differences when cheaper ingredients are used, in moderation. The "classic" blend of Orchard's Citrus and Mixed Berries drinks are: Citrus: 48% Lemon, 48% Lime, 4% Pear/Grapefruit Blend Mixed Berries: 40% Blueberry, 30% Blackberry, 20% Raspberry, 10% Grape Blend Looking forward to next year, the sales team and you have developed following projections: Expected Sales (cases) Selling price per case Material Cost per case Direct Labor per case Variable Overhead per case Fixed Overhead Citrus Mixed Berries Total 50,000 10,000 $ 100.00 $ 95.00 50.00 48.00 10.00 7.00 7.92 6.60 $ 550,000 Orchard Beverage operates in a state with no state income taxes and projects to be in the 25% Federal income tax bracket. For serious consideration of expansion, Orchard expects an after-tax profit of $1,500,000 is necessary to service the debt of a major expansion, should it decide to expand. Requirements: Prepare a spreadsheet using the model on the next page to meet the owners' needs. The Orchard Beverage Company produces healthy alternatives to widely available soft drinks. Orchard makes its high-quality beverages with fresh fruit (bought at the peak of the season, when the fruit is juiciest, plentiful, and least expensive). These drinks are made with no preservatives in small batches. Over the company's first five years, sales have been brisk, with cases selling out well before forecasted. The owners of the company are considering rapid expansion of its production facilities, so that it can better respond to demand and possibly expand beyond its current regional sales territory. Before the company seriously considers expansion, the owners turn to you, the Orchard CFO/controller, to build a spreadsheet that will help owners better understand company profitability. Furthermore, considering the volatility of fruit prices, the owners also need to the ability to perform sensitivity analysis so that owners can try "what if" scenarios with respect to the price of fruit and the percentage of fruit used in each of its two products. Orchard's drink-ologists have experimented with blends and have found a certain mix can be used as a substitute in its drinks. A mix of fresh pear and grapefruit is used as a substitute when supplies of fresh lemons or limes are too few or too costly. For its Mixed Berries drink, Orchard uses a blend of grapes as a substitute when necessary. The results of taste tests suggest that few consumers will detect differences when cheaper ingredients are used, in moderation. The "classic" blend of Orchard's Citrus and Mixed Berries drinks are: Citrus: 48% Lemon, 48% Lime, 4% Pear/Grapefruit Blend Mixed Berries: 40% Blueberry, 30% Blackberry, 20% Raspberry, 10% Grape Blend Looking forward to next year, the sales team and you have developed following projections: Expected Sales (cases) Selling price per case Material Cost per case Direct Labor per case Variable Overhead per case Fixed Overhead Citrus Mixed Berries Total 50,000 10,000 $ 100.00 $ 95.00 50.00 48.00 10.00 7.00 7.92 6.60 $ 550,000 Orchard Beverage operates in a state with no state income taxes and projects to be in the 25% Federal income tax bracket. For serious consideration of expansion, Orchard expects an after-tax profit of $1,500,000 is necessary to service the debt of a major expansion, should it decide to expand. Requirements: Prepare a spreadsheet using the model on the next page to meet the owners' needs.
Expert Answer:
Related Book For
Global Marketing management
ISBN: 978-0470505748
5th edition
Authors: Masaaki Kotabe, Kristiaan Helsen
Posted Date:
Students also viewed these accounting questions
-
You are the Manager of a Soccer Tournament. The Tournament will be held next July.During the month of May, the following transactions were recorded along with balances provided: Sponsorships...
-
respond to the instruction using the following criteria: Individual Written Case Exercise Respond to the specific questions provide in the case document it will be seven documents. Please make sure...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
IFRS requires the following: (a) Ending inventory is written up and down to net realizable value each reporting period. (b) Ending inventory is written down to net realizable value but cannot be...
-
Donald Company operates a business in Orange County. While Donald uses a calendar fiscal year, Orange Countys fiscal year begins in October. How should Donald account for its property taxes assessed...
-
How many people learned of the sale from newspapers or the Internet but not from both? A merchant surveyed 400 people to determine from what source they found out about an upcoming sale. The results...
-
In practice, what is the most serious problem raised by real options?
-
You are graduating from college at the end of this semester and after reading. The Business of Life box in this chapter, you have decided to invest $5,000 at the end of each year into a Roth IRA for...
-
Let z = 8(cos()+ + i sin ()) and w=3 (cos () + i sin ()). Which statement describes the geometric construction of the product zw on the complex plane? Stretch z by a factor of 3 and rotate radians...
-
Q) If the market efficiency is semi-strong, can fundamental analyst earn abnormal return?
-
a. What is the meaning of the term "practice of public accounting?" b. What is the meaning of the term "holding out?"
-
What are the responsibilities of the AICPA's Professional Ethics Division?
-
When light falls on a balanced detector (i.e., a detector pair, with one detector output subtracted from the other's output), the output current is proportional to the difference of the intensities...
-
a. What is the purpose of professional ethics? b. How are professional ethics imposed?
-
What are the six steps in a general framework for ethical decision making?
-
1.A 9.3% annual coupon bond with a 10-year maturity and a Rs.1,000 par value has a yield to maturity of 8%. What holding period return you would achieve from buying the bond, holding it for one year...
-
Show that gj concave AHUCQ Abadie For nonnegative variables, we have the following corollary.
-
What is are the key elements of the BCG matrix?
-
What are Porters generic strategies?
-
What is the link between the balanced scorecard and strategy?
Study smarter with the SolutionInn App