Problem 10-17 (algo) At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg's was quoted as saying, ".. . for the past several years, our individual company growth has come out of the other fellow's hide." Kellogg's has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg's and its largest rival advertise, each company earns $0 billion in profits. When neither company advertises, each company earns profits of $10 billion. If one company advertises and the other does not, the company that advertises earns $52 billion and the company that does not advertise loses $2 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising? Instruction: Enter your response as a percentage rounded to the nearest whole number. is 19 percent

Problem 10-17 (algo) At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg's was quoted as saying, ".. . for the past several years, our individual company growth has come out of the other fellow's hide." Kellogg's has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg's and its largest rival advertise, each company earns $0 billion in profits. When neither company advertises, each company earns profits of $10 billion. If one company advertises and the other does not, the company that advertises earns $52 billion and the company that does not advertise loses $2 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising? Instruction: Enter your response as a percentage rounded to the nearest whole number. is 19 percent

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter13: Lean Manufacturing And Activity Analysis

Section: Chapter Questions

Problem 1E

See similar textbooks

Similar questions

Question list Question 1 Question 2 Question 3 Question 4 O Question 5 O Question 6 Question 7 Question 8 Help me solve this (Identifying incremental revenues from new product innovations) Morten Food Products, Inc. is a regional manufacturer of salty food snacks. The firm competes directly with the national brands including Frito-Lay, but only in the U.S. Southeast Last year Morten sold $300 million of its various chip products and hopes to increase its sales in the coming year by offering a new line of baked chips. The new product line is expected to generate $39 million in sales next year. However, the firm's analysts estimate that about 60 percent of these revenues will come from existing customers who switch their purchases from one of the firm's existing products to the new healthier baked chips. a. What level of incremental sales should the company analyst attribute to the new line of baked chips? b. Assume that 30 percent of Morten's existing customers are actively looking for…
ЕOC 17.07 Consider the problem facing two businesses in the cafe market, Starbucks and Waves. Each company has just come up with an idea for a new coffee, which it would sell for $4. Assume that the marginal cost to produce a new coffee is a constant $2 and the only fixed cost is advertising. Each company knows that if it spends $6 million on advertising, it will get 2 million consumers to try its new product. Starbucks market research suggests that its coffee does not have any staying power in the market. Even though it could get 2 million consumers to buy their coffee once, it is unlikely that they will continue to buy the coffee in the future. Wave's research suggests that its coffee is very good, and consumers who try it will continue to be consumers over the ensuing year. On the basis of its market research, Waves estimates that its initial 2 million customers will buy one unit of the product each month in the coming year, for a total of 24 million units. Given this information we…
Question 15 Companies can set transfer prices to shift profits between the buyer and seller divisions of national companies to lower their overall taxes, duties, and tariffs. True False Question 16 B.B. Chick owns a factory that produces 22,000 eggs per year that are used for the production of their baskets. B.B. Chick has ample capacity to produce these eggs. B.B. Chick was recently approached by an outside supplier (Chick E. Little) that offered to produce the eggs for $12 per egg. B.B. Chick has provided the following information about the costs associated with producing their eggs: Per unit costs Costs at production of 22,000 $7 $3 $1 eggs S154,000 $66,000 $22,000 Direct materials Direct labour Variable manufacturing overhead Allocated common Fixed $2 $44,000 manufacturing overhead Total $13 S286,000 What is the maximum price B.B. Chick would be willing to pay Chick E. Little for the eggs? $222,000 $286,000 $242,000 $264,000
QUESTION 2 FPD Ltd makes and sells three different food processor models: Household, Home Pro and Chef Pro. For many years, the Household was the only food processor made by the FPD and was highly regarded for its quality. Unfortunately, demand has steadily fallen over the past two years. William Prout, FPD's production manager, suspected the reason for the decline in sales was increasing competition from overseas suppliers with lower prices. Home Pro and Chef Pro have been added to the product line over the past six years. Both are more advanced and technologically sophisticated than the Household. As a result, they are significantly more complex to manufacture and require special materials handling, tooling and setting up for each batch produced. Given the complexity of manufacturing the Home Pro and Chef Pro, FPD charges what it believes is a premium price for both of these products. The selling price of the three models are shown in the table below. Home Pro $200.00 Household Chef…
Break-Even Analysis for Individual Products in a Multiproduct Company Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners Corporation: “Wes, I’m not sure how to go about answering the questions that came up at the meeting with the president yesterday.” “What’s the problem?” “The president wanted to know the break-even point for each of the company’s products, but I am having trouble figuring them out.” “I’m sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00.” Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data concerning these products appear below: Total fixed expenses are $400,000 per year. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable numbers of customers.…
Exercise 10-9 (Algo) Return on Investment (ROI) and Residual Income Relations [LO10-1, LO10-2] A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations.) Company A Company B Company C Sales 360,000 710,000 550,000 24 50,000 Net operating income 157.000 143,000 Average operating assets 19 % 16 % Return on investment (ROI) Minimum required rate of return: 9% 14 % Percentage 51.000 Dollar amount 7 000 Residual income %24
46. LO.4 & LO.5 (ABC; pricing) Bernie Lipscomb owns and manages a commercial cold-storage warchouse that has 100,000 cubic feet of storage capacity. Historically, he has charged customers a flat rate of $0.16 per pound per month for goods stored. In the past two years, Lipscomb has become dissatisfied with the profitability of the warehouse operation. Despite the fact that the warehouse remains relatively full, revenues have not kept pace with operating costs. Recently, Lipscomb asked his ac- countant, Jenna Etheridge, to improve his understanding of how activity-based costing could help him revise the pricing formula. Etheridge has determined that most costs can be associated with one of four activities. Those activities and their related costs, volume measures, and volume levels for 2010 follow: Activity Cost Monthly Volume Measure Send/receive goods Store goods $50,000 Weight in pounds 500.000 16,000 Volume in cubic feet 80,00 Move goods 20,000 Volume in square feet 5,000 Identily…
Refer to Exercise 10.7 for data. At the end of Year 2, the manager of the Houseware Division is concerned about the divisions performance. As a result, he is considering the opportunity to invest in two independent projects. The first is called the Espresso-Pro; it is an in-home espresso maker that can brew regular coffee as well as make espresso and latte drinks. While the market for espresso drinkers is small initially, he believes this market can grow, especially around gift-giving occasions. The second is the Mini-Prep appliance that can be used to do small chopping and dicing chores that do not require a full-sized food processor. Without the investments, the division expects that Year 2 data will remain unchanged. The expected operating incomes and the outlay required for each investment are as follows: Jarriots corporate headquarters has made available up to 500,000 of capital for this division. Any funds not invested by the division will be retained by headquarters and invested to earn the companys minimum required rate of return, 9 percent. Required: 1. Compute the ROI for each investment. 2. Compute the divisional ROI (rounded to four significant digits) for each of the following four alternatives: a. The Espresso-Pro is added. b. The Mini-Prep is added. c. Both investments are added. d. Neither investment is made; the status quo is maintained. Assuming that divisional managers are evaluated and rewarded on the basis of ROI performance, which alternative do you think the divisional manager will choose?
113-It is very common phenomenon that every business tries to earn maximum profit. In doing so many efforts are carried out by the companies to increase the sales. Marketing department puts its effort in the form of designing an eye-catching advertisement which attracts customers. "Those companies who spend more on advertisement, have more operating expenses as compared to others who advertise less." This statement is the perfect example of a. Neutral statement b. Normative statement c. All of the options d. Positive statement
Question 6 Sunshine Ltd. is a privately owned business in Brisbane that operates 100 fruit juice bars in Queensland. It achieved strong results last year, with record total sales of AUD 200 million. Its cost of goods sold (COGS) then was 70% and its owners have indicated that going forward, it will be able to maintain this level of COGS for any new shop that it plans to open. The strong results were down in large part to the company's aggressive marketing efforts. This marketing compaign cost the company a total of AUD 200,000 per year, which is shared equally among all of its juice bars. Currently, with the summer coming soon, Sunshine Ltd. is considering opening a new juice bar on UQ Refectory to cater specifically to UQ students and staff. This investment will cost a total of AUD 1.5 million to establish. Sunshine has estimated that it will be able to achieve the same sales revenue for the new bar and operate this bar for 5 years. Sunshine Ltd. is subject to a 30% corporate tax…
Marketing in Action Case Real Choices at Blue Diamond Do you know how many different ways there are to enjoy an almond? According to agricultural cooperative Blue Diamond Growers, quite a few! After a price spike for almonds earlier in this decade, a market correction has occurred, prices have fallen, and demand has risen. Mark Jansen, Blue Diamond Growers President and CEO, says "I think almonds are more appropri- ately valued from a price standpoint, and I think we're in a place where we can get back to encouraging and growing fundamen- tal consumer demand for almonds around the world." Much of that growth will likely be through product development. The California Almond Grower's Exchange began in 1910, and today it represents the world's largest tree nut processing companies, serving more than 3,500 growers. The cooperative produces over 80 percent of the world's almond supply. The cooperative offers almonds in a range of forms and markets its products through the Blue Diamond…
In 1994, General Mills Incorporated, a $6 billion consumer goods company, acquired Colombo Frozen Yogurt. General Mills Inc. (GMI) believed they could add Colombo frozen yogurt to their existing product lineup to increase net sales with little addition in marketing cost. Frozen yogurt is sold through two distinct segments – independent shops and impulse locations such as cafeterias, colleges, and buffets. Frozen yogurt is the main business for the shops whereas yogurt is incremental to the impulse locations’ main business. GMI’s large sales force already served the impulse market. The financial results in the first couple of years were mixed. Earnings increased slightly and then dropped each year even though sales volume was relatively flat. In total, merchandising costs dropped, while pricing promotion rates escalated. The GMI sales force focused on the impulse segments and pricing promotions were believed to be driving volume increases. However, volume in the shop segment…