Miller Cereals is a small milling company that makes a single brand of cereal. Recently, a business school intern recommended that the company introduce a second cereal in order to "diversify the product portfolio." Currently, the company shows an operating profit that is 20 percent of sales. With the single product, other costs were twice the cost of rent. The intern estimated that the incremental profit of the new cereal would only be 2.5 percent of the incremental revenue, but it would still add to total profit. On his last day, the intern told Miller's marketing manager that his analysis was on the company laptop in a spreadsheet with a file name, NewProduct.xlsx. The intern then left for a 12-month walkabout in the outback of Australia and cannot be reached. When the marketing manager opened the file, it was corrupted and could not be opened. She then found an early (incomplete) copy on the company's backup server. The marketing manager then called a cost management accountant in the controller's office and asked for help in reconstructing the analysis indicated in the accompanying incomplete spreadsheet. Required: As the management accountant, fill in the blank cells. (Enter all amounts as positive values.)
Miller Cereals is a small milling company that makes a single brand of cereal. Recently, a business school intern recommended that the company introduce a second cereal in order to "diversify the product portfolio." Currently, the company shows an operating profit that is 20 percent of sales. With the single product, other costs were twice the cost of rent. The intern estimated that the incremental profit of the new cereal would only be 2.5 percent of the incremental revenue, but it would still add to total profit. On his last day, the intern told Miller's marketing manager that his analysis was on the company laptop in a spreadsheet with a file name, NewProduct.xlsx. The intern then left for a 12-month walkabout in the outback of Australia and cannot be reached. When the marketing manager opened the file, it was corrupted and could not be opened. She then found an early (incomplete) copy on the company's backup server. The marketing manager then called a cost management accountant in the controller's office and asked for help in reconstructing the analysis indicated in the accompanying incomplete spreadsheet. Required: As the management accountant, fill in the blank cells. (Enter all amounts as positive values.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required:
As the management accountant, fill in the blank cells. (Enter all amounts as positive values.)
Sales revenue
Costs
Material
Labor
Rent
Depreciation
Utilities
Other
Total costs
Operating profit
Miller Cereals
Projected Income Statement
For One Year
Status Quo: Single
Product
40,000
8,000
% Increase
(Decrease)
40 %
%
20 %
50 %
%
%
%
Alternative: Two
Products
60,000
60,000
8,000
5,000
Difference
$
60,000
1,000
Transcribed Image Text:Miller Cereals is a small milling company that makes a single brand of cereal. Recently, a business school intern recommended that the
company introduce a second cereal in order to "diversify the product portfolio." Currently, the company shows an operating profit that
is 20 percent of sales. With the single product, other costs were twice the cost of rent.
The intern estimated that the incremental profit of the new cereal would only be 2.5 percent of the incremental revenue, but it would
still add to total profit. On his last day, the intern told Miller's marketing manager that his analysis was on the company laptop in a
spreadsheet with a file name, NewProduct.xlsx. The intern then left for a 12-month walkabout in the outback of Australia and cannot be
reached.
When the marketing manager opened the file, it was corrupted and could not be opened. She then found an early (incomplete) copy
on the company's backup server. The marketing manager then called a cost management accountant in the controller's office and
asked for help in reconstructing the analysis indicated in the accompanying incomplete spreadsheet.
Required:
As the management accountant, fill in the blank cells. (Enter all amounts as positive values.)
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