Jonah, a recent business college graduate and avid skateboarder has been very successful in growing his skateboard shop. He is involved in all aspects from design to manufacturing to marketing. Jonah majored in marketing in college and believes his success is partly driven by his monthly marketing campaigns throughout the Greater Toronto Area. Jonah did not enjoy accounting or finance.

Zoe, also a recent college graduate and avid skateboarder has also been growing her helmet business. She always had trouble finding cool high performance helmets, so she decided to design her own. Zoe majored in accounting and believes her weak point is advertising.

Jonah and Zoe have recently been discussing combining their businesses since they serve largely the same customers, and the believe they could achieve some synergies by combining Jonah’s marketing expertise and Zoe’s financial skills.

The retail price for the skateboards is $500/each and the helmets are $50/each.

Jonah’s manufacturing and marketing costs:

Total Skateboards	Total Marketing Costs	Total Manufacturing Costs
2015	250	$45,000	$106,000
2016	275	$47,500	$115,000
2017	240	$44,000	$108,000
2018	310	$51,000	$122,000
2019	350	$55,000	$130,000
2020	400	$60,000	$140,000

Zoe’s manufacturing and marketing costs:

Total Helmets	Total Marketing Costs	Total Manufacturing Costs
2015	900	$7,500	$38,500
2016	1,200	$9,000	$49,000
2017	1,000	$8,000	$42,000
2018	1,100	$8,500	$45,500
2019	1,400	$10,000	$56,000
2020	1,700	$11,500	$66,500

Deliverable:

Prepare a well written report with the answers to each of the following questions. All calculations must be provided. Charts may be used

1. High-low cost estimation method

1. Use the high-low method to estimate the per-unit variable costs and total fixed costs for the skateboards.
2. Use the high-low method to estimate the per-unit variable costs and total fixed costs for the helmets.

NOTE: FOUR separate high-low analyses must be conducted (two for skateboards – manufacturing & marketing and two for helmets – manufacturing & marketing)

2. Cost-Volume-Profit (CVP) analysis, single-product

1. Use CVP analysis to calculate the break-even point in units for the skateboards.
2. Use CVP analysis to calculate the break-even point in units for the helmets.

Answer rating: 100% (QA)

Answer Q 1 a Per unit variable cost Fixed costs for Skateboards Variable cost pu high cost low costh... View the full answer