Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's suppliers suggested that Whitcomb could increase its profitability by 40 percent if it introduced a second line of products, packaged dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made. When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you." Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer. Required: Complete the below table by filling in the blank cells. Note: Enter all amounts as positive values. Sales Costs Material Labor Rent Depreciation Utilities Other Total costs Operating profit WHITCOMB FOODS Projected Annual Income Statement Status Quo: Single Product 31,000 6.200 3,200 10,700 S 116,000 $ 38,000 % Increase Alternative: Two (Decrease) Products 30 % $ 40 % 20 % 0% 25 % 25 % 96 200,200 43,400 7,750 14,980 Difference 12,400 1,550 4,280
Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's suppliers suggested that Whitcomb could increase its profitability by 40 percent if it introduced a second line of products, packaged dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made. When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you." Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer. Required: Complete the below table by filling in the blank cells. Note: Enter all amounts as positive values. Sales Costs Material Labor Rent Depreciation Utilities Other Total costs Operating profit WHITCOMB FOODS Projected Annual Income Statement Status Quo: Single Product 31,000 6.200 3,200 10,700 S 116,000 $ 38,000 % Increase Alternative: Two (Decrease) Products 30 % $ 40 % 20 % 0% 25 % 25 % 96 200,200 43,400 7,750 14,980 Difference 12,400 1,550 4,280
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company's
suppliers suggested that Whitcomb could increase its profitability by 40 percent if it introduced a second line of products, packaged
dried fruit for snacks. The rep offered to do the analysis and show the company the assumptions made.
When Whitcomb's management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the
meantime, the sales rep had taken a job with a competitor and told the managers at Whitcomb that "I can no longer advise you."
Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep's analysis.
They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer.
Required:
Complete the below table by filling in the blank cells.
Note: Enter all amounts as positive values.
Sales
Costs
Material
Labor
Rent
Depreciation
Utilities
Other
Total costs
Operating profit
WHITCOMB FOODS
Projected Annual Income Statement
Status Quo:
Single Product
S
$
31,000
6.200
3,200
10,700
116,000
38,000
% Increase Alternative: Two
(Decrease)
Products
30 % $
40 %
20 9
0%
25 %
25 %
&&*
96
96
200,200
43,400
7,750
14,980
Difference
12,400
1,550
4,280
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