2019 Atlantic Taffy Pricing Case

<span itemprop="name">2019 Atlantic Taffy Pricing Case</span>
2019_Atlantic_Taffy_Pricing_Case.xlsx (11.14 KB)

Preview: Thx xxxxxxxx wxll xxxxxxxx by $ xxxxxxx xs x xxxxxx xf xxxxxx xx prxcx xx Rxvxnxx bxfxrx xxxxx cxtFxxxd cxstLxbxr xxx shxppxng xxxxxxxxxxx xxxxxxx xftxr xxxxx cxtRxvxnxx Chxngx xx rxvxnxx Thx xxxxxxx wxll xxxxxxxx xx $230,000 xx x rxsxlt xx prxcx cxt xxxxxxxxxxx sxldPrxcx xxx xxxxxxxx xlxstxcxtyPrxcx xxxxxxxxxx xn %7) xxx xlxstxcxty xs xxxxxxx bxcxxsx xxxxxx xx qxxntxty xxxxxxxx xs mxrx xxxx chxngx xn xxxxx 8) xxxx xxxxx…..

The_Effects.docx (24.74 KB)

Preview: lxd xx x xxxx xn thx xxxxxxxxx fxr xnxlxstxc xxxxxxxxx thx xxxx xxxxxxxx xn xxx qxxntxty wxxld xxx xffsxt thx xxxx xn xxx xxxxxxx xnd xxxx lxxdxng x xxxxxxxx xmpxct xn xxx bxsxnxss; xxx xxxxx dxcrxxsxd xx ($134,000); thx xxxxx cxt wxll xxxx tx x xxxxxxx fxll xx rxdxctxxn by xxxxx $230,000 Thx xxxxxxxx xf xxxxxxx xxx chxngx xx prxcxng xccxrdxng xx xthxr cxmpxnxxs xxx bxsxnxssxs xxxxxx xxxxx lxxd xx xn xncrxxsx xx thx rxvxnxxs; xxx xnstxncx, xx xxx xtlxntxc xxxxx Prxcxng Cxsx, xxx xnxtxxl sxlx xxx bxx xxx xxx fxr xxxxx pxck xf xx bxxxs thxt xxx tx xxx xxxx xf xxxxx 35,000 bxxxs xxx mxnth; xn xxxxx tx xxxxx xxx rxvxnxxs xxx xncrxxsx thx xxxxxxxx hx cxmpxny xxxxxxx thxt xx xxxxxxx thx xxxxxx tx xbxxt xxx wxxld mxkx xx tx x xxxxxx rxvxnxx; xxx sxlx wxs xxxxx 37,000 bxxxs xxxxx mxnth; xxxxxxxx xxx rxvxnxx xxxxxxxxx xnd thx xxxxx sxgnxfxcxntly wxnt xxxx xn x xxxxx rxcxrd xx wxy thx xxxxxxx sxlxs xt xxx wxs xxxxxxxxxx xxxxx drxppxd xx $2,701,000 xftxr xxx prxcxs wxrx xxxx thxs xxx xx thx xxxxxxxxxxx rxdxctxxn xn xxxxx by x xxxxx xf xxxxxxxxxxx xxxxx xn xxx fxxxd cxsts xxx thx xtlxntxc xxxxx thxt xxx xxxxxxx pxr xxxxx (xndxpxndxnt xf xxxxxx xf bxxxs xxxxxxxxx xnd xxxx xxx cxsts xxx fxr thx xxxxxx cxndy, pxckxgxng xxx shxppxng; xxx xxxxxxxx dxcrxxsxd xx x rxcxrd xxxxxxxx Thx prxcx xxxxxxxxxx xf xxxxxx xx x xxxxxxxx vxlxx; -0 xxxxxxxxx xr -57 xxxxxxxxxx thxs xx xx xndxcxtxxn xxxx thx gxxds xxx xnxlxstxc sxch xxxx x xxxx xxxxx drxp xx thx prxcxs xxx xnly lxxd xx x xxxx xxxxx chxngx xx thx qxxntxty xxxxxxxx Sxgnxfxcxntly, fxr xxxxxxxxx gxxds xxx xxxxxxxxx whxn xxx prxcx xs xxxxxxxx thxn thx xxxxxxxx dxmxndxd xxxxxx xxxxxx thx xxxxxxxx xn thx xxxxxx xnd thxs xxx xxplxnxtxxn xx xx thx xxxxx xf thx xxxx xn thx xxxxx xnd xxx xxxxx thxt xxxx mxdx xftxr xxx prxcxs wxrx xxxxxxx Fxr xxx xxxxxxxxxx wxth xxxxxxxxx gxxds sxch xx xn thx xxxx xf xxxxxxxx xxxxxx thxy xxx xncrxxsx prxcxs, xxxx x lxttlx xxx mxkx xx xxxx rxvxnxx xx sxxn xn xxx cxsx whxrx xxx xnxtxxl xxxxxx xxxxxx rxsxltxd xx sxgnxfxcxntly hxghxr xxxxxxxx thxn whxn xxx rxvxnxxs xxxx xxxxxxx Thxrxfxrx, xxx gxxds xrx xxxxxxxxx xnd thxs xxxxxx sx xxxx xxxxxxx fxr xxxx gxxds, x xxxxxx xncrxxsx xn xxxxxx wxxld xxxx xx lxss xxxxx bxt stxll xxxx x bxsxnxss xxxxx mxkx xxxxxx xxx mxst xxxxxxxxx prxfxts thxt xxx rxcxrdxd Thxrxfxrx, xx xs xxxxxxxxxxx xxxx thx xxxxxxxx shxxld hxvx xxxxxxx xf hxghxr xxxxxxxx xn…..

2019 Atlantic Taffy Pricing Case

Understanding the effects of pricing on revenues, costs and profits (6% of course grade)

Introduction: It is April andyou have recently been hired as the manager of Atlantic Taffy Company in Bay Head, New Jersey. You have been asked to improve profitability. The company got its name from a propriety taffy first sold in a Jersey Shore concession also owned by the Talbot family. Note: Please use Excel for all calculations and turn in your Excel worksheet. Then use Word for a final 5-8 page written report to the owners detailing your findings, analyses and recommendations, making sure that your written report answers all the specific questions in this assignment.

Analysis of Pricing: You manage The Atlantic Taffy Company which makes a saltwater taffy bar for sale to gift shops from Atlantic City, New Jersey, to Mount Desert Island near Bar Harbor Maine. The company sells individually wrapped bars in boxes of 50 for $81.00 each. The candies retail for $3.99 for an individual bar and sales have been strong. The owners of the Atlantic would like to increase its sales and profits. They know that, if price is lowered, they will generate more sales. Sales are typically steady at 35,000 boxes per month from May through October. Last year they sold 35,000 boxes in May. So they run an experiment. Price is lowered to $73.00 per box in May of this year and the number of deliveries increases to 37,000.
What is the Price Elasticity of Demand?
Is elasticity elastic, inelastic or neither?
What does this mean and why does it matter?
Will Revenues increase or decrease as a result of the price cut? By How much?
You calculate that the fixed costs for the Atlantic Taffy are $25,000 per month (independent of number of boxes created), and each box costs $48 for the labor, candy, packaging and shipping (variable costs=per units produced). Will profits go up or down as a result of the price cut? By How much?
Income statement profits are revenue minus all costs (fixed plus variable).
David Talbot, the 19 year old son of the owner, says that there wasn’t enough time in the experiment. He estimates that in the second month, June, Atlantic Taffy will sell 40,000 boxes at $73.00 per box. Please answer the following assuming that David is correct. You want to get an idea of what will happen to profits before you commit to an action and make a projection. If profits are projected to go up assuming that David is correct, then you will keep the current price of $73.00 during June. If the profits are projected to go down, you plan to return to $81 per box.
What would be the Price Elasticity of Demand if David is correct?
Is elasticity elastic, inelastic or neither?
What does this mean and why does it matter?
Will Revenues increase or decrease as a result of the price cut to $73.00 at 40,000 boxes? By How much?
You calculate that the fixed costs for the Atlantic Taffy are still $25,000 per month and each box costs $48.00. Make a projection of revenues, costs and profits for June. Will profits go up or down as a result of the price cut if Atlantic Taffy sells 40,000 boxes? By How much?
The Atlantic Taffy owners see the change in profits from the price decrease in May and the projection for June. They decide to go back to a price of $81.00 and have sales of 35,000 boxes in June. The May production required staff to work 2 weekends and there were many complaints. No one wanted to work weekends during vacation season on the East Coast and there was no room to expand production. The owners were willing to add a second location that would permit greater production if profits justified. They decide that they are only willing to manage enough production to support 35,000 deliveries at a price of $81.00. However, if they raised price to $90.00 per box for July, they would be willing to hire additional staff, lease more space across town and produce 58,000 boxes.
Calculate the Elasticity of Supply. Is it elastic or inelastic?
How many deliveries will Atlantic have at a price of $90.00? Hint: you can only sell what customers will buy. Use the original elasticity of demand calculated in #1 above.
What will be the Revenue?
What will be the Profit?
Should Atlantic Taffy raise the price to $90.00? Why or why not?
As Manager of the company, compile your report and recommendations to the owners.
Format of the report should include:
A meaningful report title
A short executive summary with all key results and recommendations
A short introduction with report purpose and contents
Section headings helpful to the owner readers
Conclusions with key points repeated from the report body
References list in APA format
Page numbers on all pages

Below is the rubric to be used for evaluating this project part of the assignment.

Complete the remainder of the week’s assignment in the discussion area.