B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 55 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $875,000. By going through research, B&B will be able to better target potential customers and will increase the probability of success to 70 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $16.5 million. If unsuccessful, the present value payoff is $7.5 million. The appropriate discount rate is 13 percent.

Premium Corporation believes that there is a market for a portable electronic toothbrush that can be easily carried by business travelers. Premium's market research department has surveyed the features and prices of electronic brushes currently on the market. Based on this research, Premium believes that $75 would be about the right price. At this price, marketing believes that about 78,000 new portable brushes can be sold over the product's life cycle. It will cost about $1,170,000 to design and develop the portable brush. Premium has a target profit of 25% of sales. Requirement 1. Determine the total and unit target cost to manufacture, sell, distribute, and service the portable brushes. Requirement 1. Determine the total and unit target cost to manufacture, sell, distribute, and service the portable brushes. Begin by computing the total target cost to manufacture, sell, distribute, and service the portable brushes, then compute the unit target cost to manufacture, sell, distribute,…

Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below.   Deluxe Standard First quarter 12,000     90,000     Second quarter 14,200     88,600     Third quarter 16,800     93,000     Fourth quarter 20,000     91,400     The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards. Required: Question Content Area 1. Prepare a sales budget for each quarter and for the year in total. Show…

Madetaylor Inc. manufactures financial calculators.  The company is deciding whether to introduce a new calculator.  This calculator will sell for $130.  The company feels that sales will be 18,000, 22,000, 24,000, 22,000, and 18,000 units annually for the next five years.  Variable costs will be 21% of sales, and fixed costs are $500,000 annually.  The firm hired a marketing team to analyze the product's viability, and the marketing analysis cost $1,250,000.  The company plans to manufacture and store the calculators in a vacant warehouse.  Based on a recent appraisal, the warehouse and the property are worth $2.5 million after tax.  If the company does not sell the property today, it will sell it five years from today at the currently appraised value.  This project will require an injection of net working capital at the onset of the project, $250,000.  The firm recovers the net working capital at the end of the project.  The firm must purchase equipment for $5,000,000 to produce the…