Question: (i) Using Excel prepare a ‘before and after' budget comparative analysis of the revenues and costs of the Empire Group's Star Wars Electronic Toothbrush product line. The analysis should incorporate the 30% predicted sales increase and the added $0.80 per unit Marketing Rebate. Ensure you include in your analysis any impact of the budgeted production increase on other per unit manufacturing and logistics costs.
(ii) Allowing for the change in sales volumes use Excel to calculate the expected impact of the drop in sales on the per unit product costs on our competitor Death Star Manufacturing.
It can be assumed that the 90% Fixed to 10% Variable manufacturing and logistic cost break-down will hold consistently across the industry (including for competitor Death Star Manufacturing). Assume that 75% of the predicted unit sales increase of the Star Wars Electronic Toothbrush will be made at the expense of the unit sales of their main competitor Death Star Manufacturing (meaning Death Star Manufacturing unit sales will fall by 75% of the Star Wars Electronic Toothbrush sales increase). Assume that the Empire Group and Death Star Manufacturing have identical manufacturing and logistics cost structures at the commencement of the 2018 calendar year.
(iii) Prepare a brief report (maximum 300 words) for the Strategic Management Committee outlining the key points of your findings. Include some discussion on:
a. the likely impact of the changes on the cost and profit structure of Star Wars Electronic Toothbrush (derived from your answer to (i)).
b. the likely impact of the changes on the cost and profit structure of Death Star Manufacturing (derived from your answer to (ii)).
c. make a recommendation to the Committee on whether to go ahead with the planned changes. Include any other strategic advice that you consider relevant to the Committee's decision making (for example profitability for supermarkets).
(Please ensure that your answer adequately addresses ALL of the points above)
Information related to above question is enclosed below:
Attachment:- Q5.rar