Bw Manufacturing Essay

CASE SUMMARYThe owners of BW Manufacturing, a small manufacturer of gas grills, have prepared a preliminary budget for the coming(prenominal) year and would like to assess the financial pretend of several alternative scenarios, including dropping a crop changing the price on a product, with a resulting increase in volume and shifting advertising focus, with a resulting shift in volume from one product to another. A new budget must be prepared. At year-end, the material results are better than had been political platformned, but not necessarily better than what should have been, given actual sales volumes.TEACHING OBJECTIVESThis swindle case addresses the topic of contribution analysis as an easy way to analyze profit-planning issues such as adding or dropping a product or service changing a price adding or decreasing expected volumes or preparing a profit budget. In this situation there are triplet products, each with different proportions of variable and fixed costs. The pro duct with the highest profit per building block on a full cost basis has the lowest contribution per unit on a variable cost basis, and vice versa.Four different marketing plans are proposed before one is finally adopted as the plan for the year. At year-end the actual results can be compared with the budget and with a flex or adjusted budget based on the actual product volumes realized. The numbers are simple and the students can readily see the benefit of variable costing.2. Calculate the impact of reducing the Grill C price to $75, with the hope that the volume of that product will increase to 220,000 units. Assume no other changes to the plan. 3. Calculate the impact of a 10,000-unit slump in Grill A and a 10,000-unit increase in Grill C volume due to a change in advertising focus. Assume no other changes to the plan. 4. Calculate the impact of a $5 decrease in Grill Cs price and a change in advertising focus, leading to a 10,000-unit decrease in Grill A volume and a 30,000-u nit increase in Grill C volume. Assume no other changes to the plan. 5. Prepare a rewrite 2009 profit budget assuming the owners chose Option 2lowering the price of Grill C to $75 and expecting sales volume of that grill to increase to 220,000 units. 6. The actual results for 2009 are shown below. Was 2009 net income more or less than what should have been expected given these actual volumes and prices? If the results were different, why?