Miller Cereals Projected Income Statement For One Year Status Quo: Alternative: % Increase (Decrease) Two Products Single Product Difference 308,000 25 % 385,000 $ Sales revenue 77,000 Costs 20 % 57,000 Material 68,500 11,500 54,800 34,883 13,700 13,953 25 % Labor 68,500 48,836 9,700 40 % Rent Depreciation 9,700 40 % Utilities 4,850 6,700 1,850 27,906 69,766 231,000 77,000 Other 97,672 299,908 Total costs 68,908 Operating profit 11 % $ 2$ 85,092
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 25 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 4.5 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 incomplete spreadsheet is shown as follows. The marketing manager then called a cost
Required:
As the management accountant, fill in the blank cells. (Do not round intermediate calculations. Round your final answers to the nearest whole number. Enter all amounts as positive values.)
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