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Essay Available:
Pages:
4 pages/β‰ˆ1100 words
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No Sources
Style:
Harvard
Subject:
Accounting, Finance, SPSS
Type:
Case Study
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 21.06
Topic:

Baldwin Bicycle Company Case Study

Case Study Instructions:

We will discuss THREE Harvard cases, for which all groups will have to submit case reports at the
BEGINNING of the scheduled class. These are the Baldwin Bicycle Company, Johnson Beverage Inc.,
and Danshui Plant #2 cases. For each case report, I have provided questions at the back of this course
outline. I will inform you on how you may obtain copies of these cases and the Harvard Business Review
articles via Blackboard.
Students will work in their assigned groups to write-up the case analyses. Each group will be responsible
for handing in ONE written case report for EACH scheduled case at the beginning of class. Discussions
between groups, regarding the case reports are NOT permitted. Students are NOT permitted to
seek “solutions” to the cases on the internet or other sources. This will constitute a major violation
of academic integrity standards and, if detected, will have serious consequences. All submitted case
reports WILL BE SCREENED FOR VIOLATIONS OF THE ACADEMIC INTEGRITY
STANDARD.
In preparing for the case discussions, please read the facts of the case thoroughly. Further, in preparing
your case reports, all you have to do is to answer the questions provided at the back of the course
outline for each case and any supplementary questions on Blackboard. Executive summaries are
NOT required. I reserve the right to change the case questions during the course.

Case Study Sample Content Preview:

Baldwin Bicycle Company
Name
Institution
Baldwin Bicycle Company
Question One: The expected added profit from the Challenger line
Expected Sales Per unit


$92.29

Variable Costs:



Materials

$39.80


Direct Labor

$19.60


Overhead (40 % of 24.50)

$9.80

$69.20

Contribution per unit


$23.09

Annual Contribution


25,000

Total Contribution


$577,250.00

Question Two: The expected impact of cannibalization of the existing sales
First we need to determine the contribution margin ratio which is given by:
(Sales-variable expenses)/sales=$2827/$10,872=0.26=26%
To determine the full cost divide the estimated first year costs by (100%-26%)=74%
Therefore:
$83.90=0.74=$113.38. This will be the sales per unit
Sales per unit

$113.38

Variable Costs

$69.20

Contribution margin

$44.18

Lost sales per year

3000

Lost Contribution

$132,540.00

Question Three: Costs that will be incurred on one-time basis
The company will need to incur one-time added costs amounting to $5,000. The cost will be incurred to prepare drawings and/or arrange sources for fenders, handlebars, seats, and shopping boxes that are different from the ones that are currently used. However, it is expected that this cost may vary per year depending on the changes in prices and charges.
Question Four: Additional Assets and the related carrying costs
The total asset related cost is 23%.
The work in progress related cost 17%, leaving out just the 6% for inventory-handling labor and equipment.
Finished goods also take 23% which is the total asset related cost.
Finished goods at Hi-Valu and the Hi-Valu receivables will be 13.5% (pretax + record keeping)
Materials Cost
Annual sales=25,000
Sales per month=25,000/12= 2083.333
Two months supply=2083.333*2=4166.667
Materials cost=4166.667 * ($39.8 *23%)=$38,141.67
Therefore, the total cost of materials stands at $38,141.67
Work-in-progress
1,000 bikes are in work in progress
Direct labor is $19.60
Overhead cost=$9.80
Total=$29.40
50% of 29.4=$14.70
$39.8 + $14.70=$54.50
17% of 54.50=$9.265
1000 * $9.265=$9,265
Therefore, the total cost of work in progress is $9,265
Finished Goods
The ...
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