Sweet Limited, a New Zealand ice-cream manufactory, is trying to develop a new f
ID: 2371817 • Letter: S
Question
Sweet Limited, a New Zealand ice-cream manufactory, is trying to develop a new flavour of ice-cream. The marketing department conducted a survey in August 2011 to assess consumer preference for the best flavour(s). The survey result shows that hazel-nuts toffee flavour is the most popular one in NZ and Australia. The cost of the survey is $20,000. The production department needs to identify some possible suppliers for the hazel-nuts and coffee beans used in producing toffee flavour ice-cream. The traveling expenses in visiting possible suppliers and checking on quality of the raw materials amount to $30,000. These expenses were incurred during November 2011 to February 2012. In April 2012, the production department produced some hazel-nuts toffee ice-cream for testing. The cost of producing these ice-creams was $25,000. These ice-creams are used for another marketing research. The second round research costs amount to $15,000. This time the consumers were asked to evaluate the taste and to determine how much they would like to buy it for. After a few more rounds of testing in May and June 2012, consumers show a satisfaction of the taste and they are willing to pay $8 per container (1 litre container). The cost of production is $2.5 per container. The overhead per container is $.50 cent. The marketing department estimates 1 million containers of hazel-nuts toffee ice-cream can be sold annually. Sweet LimitedExplanation / Answer
entity credit debit
cost of survey $20,000
travelling expence $30,000
cost of producing icecream $25,000
second round research expenses $15,000
Total $90,000
cost of one container= 2.5+.5= $3
estimated quantity to be sold= 1,000,000
estimated revenue= 1,000,000x8= $8,000,000
cost for i million containers= $3,000,000
Profits= $5,000,000
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