Honey Dukes Solution

Parameters Total Sugar coating needed

Sugar coating price(CP)
unit cost of open market grapes
unit cost of contract grapes
Inhouse processing Plant capacity
Variable processing cost(Inhouse plant)
Variable processing cost(outsourced)
Fixed cost Plant
Demand of resin at starting unit price
Decrease and increase in demand of raisins per penny of unit price
Grapes needed needed to produce one pound of resin
Sugar coating needed needed to produce one pound of resin

CP of grapes from Grower(Contract)

CP of grapes from market
Total quantity of grapes required

Decision Quantity of grapes purchaed from grower(Contract)

Quantity of grapes purchaed from market
Selling Price of sugar coated resin

Calculations Processing cost

Plant Variable cost
Outsource cost
Grapes purchased at contract from grower
Grapes purchased at contract from market
Sugar coating
Plant fixed cost
Total cost

Qty sold of resin

SP
Revenue

Summary of key Outcomes Profit

Q1 What is the breakeven value of the open-market grape price?

Ans $ 0.81
Q2 Using a data table, show how profit varies as a function of the price set for raisins. Cover a rang
Ans

$ 1.80
$ 1.90
$ 2.00
$ 2.10
$ 2.20
$ 2.30
$ 2.40
$ 2.50
$ 2.60
$ 2.70
$ 2.80

Q3. Using a data table, show how profit varies as a function of the price set for raisins and the amount of grapes brought unde

$ 448,125.00
$ 1.80
$ 1.90
$ 2.00
$ 2.10
$ 2.20
$ 2.30
$ 2.40
$ 2.50
$ 2.60
$ 2.70
$ 2.80
 37500
$ 0.55
$ 0.30
$ 0.25
1500000
$ 0.20
$ 0.45
$ 200,000.00
750000
15000
2.5
0.05

Expected price/pound
$ 0.25
$ 0.30
1875000

1000000
875000
$ 2.20

Qty processed Total price

1500000 $ 300,000.00
375000 $ 168,750.00
1000000 $ 250,000.00
875000 $ 262,500.00
37500 $ 20,625.00
$ 200,000.00
$ 1,201,875.00

750000
$ 2.20
$ 1,650,000.00

$ 448,125.00
rice set for raisins. Cover a range from $1.80 to $2.80 in steps of $0.10

$ 448,125.00 ### 810000 795000 780000 765000 750000 735000

148125 $ 1.80 141975 143513 145050 146587.5 148125 149662.5
223125 $ 1.90 222975 223013 223050 223087.5 223125 223162.5
298125 $ 2.00 303975 302513 301050 299587.5 298125 296662.5
373125 $ 2.10 384975 382013 379050 376087.5 373125 370162.5
448125 $ 2.20 465975 461513 457050 452587.5 448125 443662.5
523125 $ 2.30 546975 541013 535050 529087.5 523125 517162.5
598125 $ 2.40 627975 620513 613050 605587.5 598125 590662.5
673125 $ 2.50 708975 700013 691050 682087.5 673125 664162.5
748125 $ 2.60 789975 779513 769050 758587.5 748125 737662.5
823125 $ 2.70 870975 859013 847050 835087.5 823125 811162.5
898125 $ 2.80 951975 938513 925050 911587.5 898125 884662.5

amount of grapes brought under contract. Cover a range from $1.80 to $2.80 (in steps of $0.10) for the price and a range from 0.5 million p

500000 600000 700000 800000 900000 1000000 1100000 1200000 1300000

123125 128125 133125 138125 143125 148125 153125 158125 163125
198125 203125 208125 213125 218125 223125 228125 233125 238125
273125 278125 283125 288125 293125 298125 303125 308125 313125
348125 353125 358125 363125 368125 373125 378125 383125 388125
423125 428125 433125 438125 443125 448125 453125 458125 463125
498125 503125 508125 513125 518125 523125 528125 533125 538125
573125 578125 583125 588125 593125 598125 603125 608125 613125
648125 653125 658125 663125 668125 673125 678125 683125 688125
723125 728125 733125 738125 743125 748125 753125 758125 763125
798125 803125 808125 813125 818125 823125 828125 833125 838125
873125 878125 883125 888125 893125 898125 903125 908125 913125
 720000 705000 690000 675000 660000
151200 152737.5 154275 155812.5 157350
223200 223237.5 223275 223312.5 223350
295200 293737.5 292275 290812.5 289350
367200 364237.5 361275 358312.5 355350
439200 434737.5 430275 425812.5 421350
511200 505237.5 499275 493312.5 487350
583200 575737.5 568275 560812.5 553350
655200 646237.5 637275 628312.5 619350
727200 716737.5 706275 695812.5 685350
799200 787237.5 775275 763312.5 751350
871200 857737.5 844275 830812.5 817350

ce and a range from 0.5 million pounds to 1.5 million pounds of grapes bought under contract (in steps of 0.1 million).

1400000 1500000
168125 173125
243125 248125
318125 323125
393125 398125
468125 473125
543125 548125
618125 623125
693125 698125
768125 773125
843125 848125
918125 923125
Scenario Summary
Current Values: Low Medium
Changing Cells:
Open market grape price $ 0.30 $ 0.25 $ 0.30
Result Cells:
Profitt $ 448,125.00 $ 491,875.00 $ 448,125.00
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.
 High

$ 0.35

$ 404,375.00
Parameters Units sold
Adults’ Racers 10000
Adults’ Two- Piece 10000
Children’s Racers 5000
Children’s Two-Piece Suits 7000

Selling and admin costs $ 17,500.00

tax 35%
Salary Current $ 38,500.00
Future salary $ 39,100.00
Number of employees 5.00

Product Categories quantities Option 1: Continued marketing

Adults’ Racers 10000
Adults’ Two-Piece suits 10000
Children’s Racers 5000
Children’s Two-Piece suits 7000
Total quantity 32000

Decision variables Product Categories Advertising cost Option 1: Continued marketing

Adults’ Racers $ 7,000.00
Adults’ Two-Piece suits $ 10,000.00
Children’s Racers $ 8,000.00
Children’s Two-Piece suits $ 8,000.00

Calculation Present marketing

Revenue 1438400

marketing cost $ 33,000.00

Variable maufacturing Cost 783000
Distribution cost 91000
Salary $ 192,500.00
Selling and admin costs $ 17,500.00
Total cost $ 1,117,000.00
Profit Before tax $ 321,400.00
Tax $ 112,490.00

Outcome Profit after tax $ 208,910.00

 Unit sales price Variable manufacturing costs Distribution costs
$ 39.95 $ 17.00 $ 2.00
$ 49.95 $ 17.00 $ 3.50
$ 44.95 $ 35.75 $ 3.00
$ 44.95 $ 37.75 $ 3.00

Option 2: Discount Option 3: College Option 4: High End

6000 12500 6500
15000 6000 6000
3000 3500 5000
4000 4500 5000
28000 26500 22500

Option 2: Discount Option 3: College Option 4: High End

$ 5,000.00 $ 1,000.00 $ 5,000.00
$ 10,000.00 $ 3,500.00 $ 6,000.00
$ 4,000.00 $ 3,500.00 $ 5,000.00
$ 4,000.00 $ 4,500.00 $ 5,000.00

Option 1: Continued marketing Option 2: Discount Option 3: College

1438400 1303600 1158675

$ 33,000.00 $ 23,000.00 $ 12,500.00

783000
91000
$ 195,500.00
$ 17,500.00
$ 1,120,000.00
$ 318,400.00
$ 111,440.00
615250
85500
$ 195,500.00
$ 17,500.00
$ 936,750.00
$ 366,850.00
$ 128,397.50
609500
70000
$ 195,500.00
$ 17,500.00
$ 905,000.00
$ 253,675.00
$ 88,786.25

$ 206,960.00 $ 238,452.50 $ 164,888.75

 Marketing
$ 7,000.00
$ 10,000.00
$ 8,000.00
$ 8,000.00

Option 5: Balanced
11500
12500
8000
9000
41000

Option 5: Balanced
$ 7,500.00
$ 7,500.00
$ 5,000.00
$ 5,000.00

Option 4: High End Option 5: Balanced

1008875 1847950

$ 21,000.00 $ 25,000.00
580000 1033750
64000 117750
$ 195,500.00 $ 195,500.00
$ 17,500.00 $ 17,500.00
$ 878,000.00 $ 1,389,500.00
$ 130,875.00 $ 458,450.00
$ 45,806.25 $ 160,457.50

$ 85,068.75 $ 297,992.50