Question;PROJECT OVERVIEW;Pete's;Pet Products is a sole proprietorship owned by Pete Thompson. The store;provides a full-line of pet products, including food, grooming materials, toys;leashes, etc. The company also sells hand?made pet houses, including dog houses;bird cages, and cat castles. Each of the pet houses is being evaluated in terms;of cost-volume-profit. See the relevant information below;Dog house;Bird cage;Cat castle;Sales Price;$140;$95;$160;Variable cost;$65;$34;$56;Fixed monthly cost;30%;25%;45%;When;Pete uses a distributor to sell additional pet houses, he has to pay a sales;commission of 8% of the sales price. On average, he sells 60% of each pet house;through distributors. The fixed costs (shown above) are based on estimated;design time for each product. Pete's store averages $32,000 of fixed costs per;month.;Refer;to the Course Schedule within the Syllabus for specific project deliverables;and due dates.;DELIVERABLE;Based;on the information presented above, please answer the following questions. Use;Excel for this assignment. Complete your calculations using the Excel features;and simply type in narrative answers.;? Calculate the contribution margin for each;pet house. Ignore the sales commission for this computation.;?;Calculate the monthly break-even units for each pet house. Ignore the;sales commission for this computation.. Assuming that Pete plans to sell 750 dog;houses, 335 bird cages, and 640 cat castles (60% through distributors), prepare;a contribution margin income statement based on these sales volumes. Include;sales, each type of variable cost (including sales commission), and fixed;costs.;?;Assuming the distributors decide to ask for a 12% commission on each pet;product, compute how much Pete will have to reduce his other costs to make up;for this. Are there other counter proposals Pete could suggest?. Based on fierce competition from a rival;store named Fran's Fuzzy Friends, Pete has decided to decrease his selling;price for a dog house by 10%. He has also decided to pay a local celebrity;$2,000 a month to promote his store. This cost will be allocated only to the;dog houses. Recalculate the dog house break-even point given this new;information. Ignore sales commission for this computation.;Pete was recently asked to submit a bid for a;new customer who is interested in purchasing 450 dog houses, 250 bird cages;and 550 cat castles to stock his newly opened store in another state. What;factors would impact Pete's bid to the new customer? What happens if a;competitor's bid comes in lower than what Pete can offer? Would you recommend;Pete drop the selling price rather than lose the opportunity? Why or why not?;Explain how much he can afford to drop the price.
Paper#38248 | Written in 18-Jul-2015Price : $27