Brief-Case Discussion Memo 1: Case Questions Molto Delizioso: Pricing and Profits Following Brexit Devaluation 1. Recalculate the income statement shown in case Exhibit 1* using the post-Brexit...

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Answered Same DayMar 30, 2021

Answer To: Brief-Case Discussion Memo 1: Case Questions Molto Delizioso: Pricing and Profits Following Brexit...

Neenisha answered on Mar 31 2021
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Brief-Case Discussion Memo 1: Case Questions
Molto Delizioso : Pricing and Profits Following Brexit Devaluation
Q1 (S1).
    GBP / EUR = 1.16
    Per Unit
    Quantity
    Pound (£)
     Euros (€)
     Sales (in GBP)
    £
200.00
    40,000.00
    £ 80,00,000.00
    € 92,80,000.00
    Contract Labour (Variable Cost) (in GBP)
    £ 5.00
    40,000.00
    £ 2,00,000.00
    € 2,32,000.00
    Import of Coffee Machines (€90 per unit)
    € 90.00
    40,000.00
    £ 31,03,448.28
    € 36,00,000.00
    Marketing (Fixed Cost)
    
    
    £ 4,00,000.00
    € 4,64,000.00
    Other Fixed cost
    
    
    £ 5,00,000.00
    € 5,80,000.00
    Profit (=Sales - Costs)
    
    
    £ 37,96,551.72
    € 44,04,000.00
Calculations:
Price Per Unit = £ 200 (Given)
Quantity = 40,000 (Given)
Sales (in Pounds) = 200*40000 = £ 80,00,000
Sales (in Euros) = 80,00,000*1.16 = € 92,80,000
Variable cost:
Contract Labour (in Pounds)= £ 2,00,000 (Given)
Contract Labour (in Euros)= 2,00,000*1.16 = € 2,32,000
Import of Coffee Machines (in Euros) = 90*40000 = € 36,00,000 ( € 90/unit – Given)
Import of Coffee Machines (in pounds) = 36,00,000/1.16 = £ 31,03,448.28
Fixed Cost:
Marketing (in pounds) = £ 4,00,000 (Given)
Marketing (in Euros) = 4,00,000*1.16 = € 4,64,000
Other Fixed Cost(in pounds) =£ 5,00,000 (Given)
Other Fixed Cost (in Euros) = 500000*1.16 = € 5,80,000
Profit = Sales –(Variables Costs +Fixed Costs)
Profit (in pounds) = £ 37,96,551,72
Profit (in Euros) = € 44,04,000
Q2. (S2)
    GBP / EUR = 1.16
    Per Unit
    Quantity (3)
    Pound (£)
    Euros (€)
     Sales (in GBP)
     £ 235.00
    39,961
     £ 93,90,835.00
     € 1,08,93,368.60
    Contract Labor (Variable Cost) (in GBP)
     £ 5.00
    39,961
     £ 1,99,805.00
     € 2,31,773.80
    Import of Coffee Machines (€90 per unit)
     € 90.00
    39,961
     £ 31,00,422.41
     € 35,96,490.00
    Marketing (Fixed Cost)
     
     
     £ 4,00,000.00
     € ...
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