Management Accounting Assignment
Case Study - Good Foods Limited
Question 1
You are a Finance manager at GF. Write a report to the management of GF regarding the new Quality brand. Your report should:
a) Identify the type of generic strategy option adopted by GF when it launches the new Quality brand in the Mainland, using any appropriate strategy model and compare it with the existing strategies adopted by GF;
b) Evaluate the appropriateness of the strategy to launch the new Quality brand in the Mainland, using a product life cycle model;
c) Based on 2013's operational estimates, calculate the contribution margins and profitability of the existing brands (Le. Organic, Premium (Regular) and Premium (Family). Explain your calculation where necessary;
d) Evaluate Geoffrey's suggestion to change the pricing of the existing brands;
e) Your calculation of the net present value (some of figures are included in Table) and the payback period of the investment in the new mixing and packaging machine; and
f) Explain your recommendation on the proposed launching of the new Quality brand and the matters to which you would alert the management.
Table A
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Sales revenue
|
12,000
|
14,400
|
17,280
|
20,736
|
22,810
|
25,091
|
|
Production costs
|
6,600
|
7,920
|
9,504
|
11,405
|
12,545
|
13,800
|
|
Additional wages
|
500
|
500
|
500
|
500
|
500
|
500
|
|
Selling and marketing costs
|
840
|
1,008
|
1,210
|
1,452
|
1,597
|
1,756
|
|
Additional promotion expenses
|
2,000
|
2,000
|
-
|
|
|
|
|
Discount factor
|
0.870
|
0.757
|
0.658
|
0.572
|
0.497
|
0.432
|
GF is subject to income tax at a rate of 20%, payable at year end, and is entitled to tax depreciation allowance.
Question 2
Based on the new Quality brand's contribution to GJ's net profit for 2014 and 2015, explain your views on the principal reason for Geoffrey's strong reaction to the introduction of the new brand. From the perspective of professional ethics, do you consider Geoffrey's reaction appropriate? How would you advise the management of GF to resolve this issue?
Attachment:- Management-Accounting-Assignment.pdf