1. Undertake a break-even analysis to determine when the company is likely to break-even on introducing Mountain Man Light. In doing your analysis account for the possible effect of MM Light cannibalizing the sales of MM. The company is introducing a lower margin product that will take sales from a higher margin product therefore it will cannibalize MM contribution margin.
Hints: Break-even unit sales = [fixed costs+ loss of contribution from sales cannibalization]/[contribution per barrel]. Contribution per barrel = price per barrel – variable cost) – see video below
I recommend the following steps:
First, determine the fixed cost per year each year of the forecasted period:
Your spreadsheet columns should be 2006 to 2010
Fixed cost: Introductory Advertising of $750,000 (page 6), Incremental SG&A $900,000 (page 6). Determine which fixed cost are repeated each year. 2005 sales were 520,000 barrels or $50,440,000 (see Exhibit 1).
Step 2: Determine contribution per barrel of beer for each year: Calculate the cannibalization cost. Light beer will cost $4.69 (page 6) more per barrel to produce. Assume a 5% cannibalization rate. Calculate the total cannibalization cost for 2006 using the 2005 sales of $50,440,000 and apply the contribution margin or gross margin (see Exhibit
Determine sales for both beers for the period. Adjust for the -2% contraction in the market for regular beers. Also, you are provided with the initial market share estimate and growth rate for MM Light.
Your analysis should tell us when MM is expected to breakeven on MM Light and the B/E unit sales. Hint: MM Light will not B/E the first year. Be brave and post your analysis to the discussion board. Don't obsess and be embarrassed that your answer may be incorrect. It’s more about the learning process.
2. Should Mountain man introduce a light beer? (Provide 3 most important pros and 3 cons. Each point should be made in no more than 2 sentences. Then conclude with your recommendation. Get Custom Essay Writing help today
Why Homework Market
We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.
We have hired a team of professional writers experienced in academic and business writing. Most of them are native speakers and PhD holders able to take care of any assignment you need help with.
If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account.
All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. We will always strive to deliver on time.
We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text.
Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
No need to work on essay at night. Sleep tight, we will cover your back. We offer all kinds of essay writing services.
No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.
An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.
Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.
If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied.