FROZEN BLACK POND ORG. Harvard Case Solution & Analysis

FROZEN BLACK POND ORG. Case Study Solution

Sales Volume and Revenue at Break Even Point

Sales volume at the breakeven point is at 2045 Units, which is at around 50% of the total anticipated sales volume for the entire carnival.

Sales Revenue at dollars at the breakeven point, is at $ 20,450.

Sales Volume and Revenue required for Financial Goals

According to the current minimum wage limit in CANADA is at $ 14 approximately per hour. We would require a further $ 20 for the risks of the venture. The required return needed would be $ 1360 in profits for the risks.

That would accumulate towards a further 231 units (1360/5.89) after breakeven, totaling at 2271 units. This have a sales revenue of $ 22,710 units.

  1. Summary of Results and Earnings per Hour

After performing the CVP Analysis for the Venture, we have analyzed that the business if performed at the estimated full capacity without any glitches, would provide a return of around 50% in the profit, for a 5 day term period.

Batches of 8 units will be fried by the staff, totaling a staggering 4023 units in a 5 day schedule. The total work hours would be 40 hours, this means that 100 units would need to be friend every hour, 12 batches approximately every hour. This is a do- able task by the staff which will be hired for the produce.

The profit margin is great in this venture and if needed, extra work force can be hired to assist in the making and selling of this “BEAVERs TAIL” product.

Though, it looks to be a great opportunity as even if the organization sells half of the products estimated from the market at the current price, the organization will achieve breakeven on their produce.

Further, there are two problems that have come across during this venturing process; one will be the rate that is decided of the $10 per unit, and the other being the different toppings that will be offered and at what unit- they will be charged for the product.

According to the industry data, at best $ 5 is the average market price for one of the top businesses that deals in Beavers tail business. Though, this is not a normal business and it will be a carnival show with lots of people during the phase and the prices will be higher as though this happens with other items during the process. Though, it is required to assess the competitors’ prices, to be sure on what to expect from competition, a price similar to them will be expected and should also be used in our business.

The other problem identified is the uses of toppings for the product, it is recommended to invest in the fruit and other items moving in the industry. We have calculated approximately $ 0.20 cost of any further fruit toppings required. This will be priced higher with a contribution margin of a plus $ 1.8 on the already $ 5.89 criteria.

Though, before going forward; the prices of competitors needs to be analyzed to check the competition in the market.

Earnings per hour determined is the total profit percentage of the whole venture, this provides a total figure of $ 13,317. For a 40 hour work time, this is a staggering $ 332 earned per hour.

  1. BRIEF MEMO

To:

Mr. Rammstein,

Executive Director,

FROZEN BLACK POND ORG.

Chill Ville, MN, 55789
Exhibits

Exhibit 1: Beaver tail average Menu

(Beaver Tails Org., 2018)

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