Based on the income statement for 1992 and the information in item 5 of exhibit 2 that the company sold 98,791 bicycles for 1992, how much was the average per unit sales price, average per unit cost of sales, and average gross margin per bicycle 2. In case of Baldwin, the company needs to sale the bicycles to Hi-Value at a lower price if it enters in to the deal. Thorough market demand forecast As a market upturn in the future will make the Challenger deal unnecessary, an accurate market demand forecast is extremely important for making the new business decision. These devices can leverage existing manufacturing capacity toexploit new markets. Hence, financial analysts must examination: 1.
The high inventories and accounts receivables, which account for 62% and 31% respectively of total current assets, substantially impair the financial liquidity see exhibit 4 -balance sheet. Also, our direct customers local shop owners, etc. The high Debt to Equity ratio of 1. This wouldput pressure on the discount chains to relax their credit terms. . Sales were made through independent stores and bicycle shops. What is the per unit contribution margin sales price -variable costs of the standard Baldwin bicycle.
Baldwin had never before distributed its products through department store chains of any type. My best guess is that our sales over the next three years will be about 100,000 bikes a year if we forego the Hi-Valu deal. Until year 1982, Baldwin remains the medium position in the market. Knott estimated that on average, a bike would remain in a Hi-Valu regional warehouse for two months. Managers need to analyze the behavior of three different types of costs: - Fixed costs; - Variable costs; - Semi-Variable or mixed costs.
The first 10 years of business, business was great, profits were on a steady incline and customers were well satisfied. It is difficult to estimate the incremental return on investment for the Challenger deal due to insufficient information. Paretoanalysis through major inexpensive statistical software packages can help identify the few hecritical activities that are responsible for most of the inefficiencies. It produces 10 models from beginnermodels to deluxe 12-speed models. Economics includes the investigation of how society deals with its rare assets In many social orders, assets are allotted through the consolidated choices and activities of a huge number of family units and firms. Most of Baldwin's sales were through independently owned retailers, primarily bike shops but to a lesser extent toy stores, hardware stores and sporting goods stores.
International Journal of Business and Management, 11 4 , p. Knott estimated that on average, a bike would remain in a Hi-Valu regional warehouse for two months. Before investing substantially in this business opportunity, the company will be better off if it invests in market data collection and analysis. To meet the increased annual production, Baldwin should invest at least 685,511 in working capital including such as inventories and accounts receivable. What would be the net profits loss of the company before taxes, assuming only the Challenger bicycle were sold, i.
The low inventory turnover of 2. Knott estimated that on average, a bike would remain in a Hi-Valu regional warehouse for two months. Inventory Costs yearly monthly P. Baldwin Bicycle Case Study Strategic Cost Managment Submitted to-Mr. Baldwin had been a bicycle manufacturer for almost 40 years. The return on investment of the Challenger deal is 23.
Leister about the possibility of Baldwin producing bicycles for Hi-Valu. The case was originally set in the early 1980's. Labour represents 45% of costs. Suzanne Leister realized she needed to do some preliminary financial analysis of this proposal before having any further discussions with Karl Knott. .
Journal of the American Statistical Association. Huffy Corporation produces these other unpowered orhumanpowered vehicles as an extension to its bicycle product line since the technologies arerelated. . What is the per unit contribution margin sales price -variable costs of the standard Baldwin bicycle. Currently, Baldwin is producing 10 model bicycles. Based on the average per unit costs of the Challenger, as discussed in Exhibit 2, Item 1 and the fact that the accountant says that about 40% of the overhead costs of the new brand would be variable, how much are the per unit variable manufacturing costs of the new bike? Thus the existing relationships may suffer when the company selling the similar product at two different prices in two different sales channels. If yes, we will need to decide what costs should be included in manufacturing and carrying the working capital investment a Challenger bike, including erosion costs and recommended chargeable amount.