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 portfollo." 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 3.5 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.xisx. The Intern then left for a 12-month walkabout in the outback of Australlia 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 Incomplete spreadsheet is shown as follows. The marketing manager then called a cost management accountant in the controller's office and asked for help in reconstructing the analysis.
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 portfollo." 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 3.5 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.xisx. The Intern then left for a 12-month walkabout in the outback of Australlia 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 Incomplete spreadsheet is shown as follows. The marketing manager then called a cost management accountant in the controller's office and asked for help in reconstructing the analysis.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I started to work on this problem but I'm confused on how I find the missing amounts/percentages with the limited information.
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 3.5 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.xisx. The intern then left for a 12-month walkabout in the outback of Australa 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 Incomplete spreadsheet Is shown as follows. The marketing manager then called a cost
management accountant in the controller's office and asked for help in reconstructing the analysis.
Transcribed Image Text:Miller Cereals
Projected Income Statement
For One Year
Status Quo:
% Increase
Alternative:
Single Product
(Decrease)
Two Products
Difference
Sales revenue
200,000
40 % S
280,000
80,000
Costs
Material
60,000
70,000
10,000
Labor
15 %
70,000
Rent
50 %
Depreciation
10,000
10,000
Utilities
5,000
7,000
2,000
Other
Total costs
Operating profit
*||||訳
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