Calculate the effect on Barking Biscuits profit if the Puppy food was added. Calculate the...
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Calculate the effect on Barking Biscuits profit if the Puppy food was added.
Calculate the effect on Barking Biscuits profit if the Old Faithful dog food was added.
Explain which product, if any, you would recommend that Barking Biscuits adds.
Add or Delete Barking Biscuits currently produces Active food for energetic adult dogs. The business is considering adding another line of dog food, either Puppy food for young dogs or Old Faithful for mature less active dogs. Fixed costs associated with shared production facilities are $10,000. Other financial information is as follows: Sales Variable costs Contribution margin Direct fixed costs Segment margin Existing Product Active $ 75,000 (40,000) 35,000 (18.000) $ 17,000 Possible New Products Puppy Old Faithful $ 62,000 $ 38,000 (35,000) (24,000) 27,000 14,000 (14,000) (8,000) $_13.000 $ 6,000 If Barking Biscuits adds the Puppy food, sales of the Active food will decrease by 13 per cent. If the Old Faithful dog food is added, sales of the Active food will increase by 5 per cent
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