Bw Company Case

954 Words4 Pages
BW MANUFACTURING COMPANY In mid-December 2008, Inez Wallace and Oliver Blanchard were almost through with the 2009 operating budget for their company, BW Manufacturing Company (BW). BW produced gas grills in three primary models (Grills A, B, and C). The industry was dominated by Weber, Ducane, Coleman, Sunbeam, and Holland, which together made dozens of types of grills, smokers, and cooking kettles. BW was a small player in the industry, but business had been good, and it was expecting another profitable year. A draft of the company's operating budget is shown in Exhibit 1. Standard costs for the three products are explained in Exhibit 2. Selling, general, and administrative (SG&A), other costs, interest income, and interest expense were likely to remain the same no matter which product-line combinations the company produced. Before calling it a day, the two owners asked their assistant, Justine Richardson, to determine the impact of several options on income before tax. They agreed to meet the following day, and Richardson hurried off to look at what these latest ideas would mean. She had four questions to address and was asked to consider each option independent of all other options. 1. Should BW drop Grill A? The owners wanted to know the impact of dropping Grill A from their line of products. Richardson was told to assume that the volumes and selling prices of the other two products would be the same whether or not the Grill A product line was dropped. 2. Should BW lower the price of Grill C? The owners wanted to know the impact if they lowered the price of Grill C to $75 and if doing so led to a 20,000-unit increase in sales of Grill C. 3. Should BW change its advertising focus? The owners wanted to know the impact of a 10,000-unit increase in Grill C volume and a related 10,000-unit decrease in Grill A volume because of a shift in advertising emphasis.

More about Bw Company Case

Open Document