Dansk Minox Case Study Essay

Problem A/S Dansk Minox is a company base in Copenhagen, which specializes in branded vacuum-packed meat and other food products. with consumer survey, the company found that t present was a large untapped foodstuff for a Complete meal product which included cuttingd porc a presbyopic with a vacuum-sealed bag of red cabbage salad. After long discussions among the marketing and finance departments, the be intimate meal pack was introduced at a price of $ 8.20 per pack of 1 kg. It sold only 30 slews as against the budgeted sales of 85 lots. The problem facing the company is that whether it has to nail further production of the complete meal product or manifest a new consumer price of $ 6.85 per pack, in order to boost sales. Considerations and compendIn order to decide the course of action we may numerate at the following particulars and considerations.Consumer Price 8.20 6.85 retail merchant Price 5.72 4.78Variable follow 3.49 3.41Volume Sales (in kgs) 30000 85000Adver tising Costs 0.3 0.3Impact on emolument 41,400 90,950As we can see, impact on profit is higher when 85000 kgs of complete meal is sold at $6.85/kg, rather than selling 30000 kgs at $ 8.20/kg. Now, another(prenominal) point to note is if production expenses are to be revised to $ 1.20/kg, accordingly on a full cost basis, the complete meal would cost. issue forth unit cost (new) = Total unit cost (old) mathematical product expenses (old) + Production expenses (revised) Total unit cost (new) = 4.64 0.54 + 1.20 = $ 5.30And Profit per unit would be = Retailer price Total unit cost (new) = 4.78 5.30 = (-0.52) (i.e) there would be a loss of $ 0.52/kg, on a full cost basis, when the complete meal is sold at $ 6.85. Conclusion and RecommendationsThe point to be focused here is that though the new product might sell 85tons at a revised price of $ 6.85 per pack, it will incur losses on a full cost basis. Also it is not operable to lower the production costs anymore because, the reso urces of A/S Dansk Minox which were narrow for meat processing were now processing Vegetables. This is not their issue capability and hence they would incur more costs in performing activities that they do not specialize in. Furthermore, the need for a single package containing sliced pork and red cabbage salad is itself questionable because the same packs are besides individually available and these individual packs are of better quality because slice pork is Dansk Minoxs speciality and red cabbage salad is its competitiors specialty.Hence, it is recommended that Dansk Minox snap further production of complete meal (because red salad is not its core competency) and concentrate on selling its standard packs, which are in fact having a significant boost in their sales or the circumspection can look to collaborate with the best red cabbage salad reservation company and together give the customers the best quality of complete meal at the best price. The final decision would howe ver be aquiline upon managerial discretion and organizational guidelines/objectives.