Imagine you are a business analytics employee at BAT Car Company. The president and CEO of BAT have tasked you with providing them with a data plan addressing expansion of BAT’s production business into Frankfurt, Germany, on a $40 million Model Z plant.
This $40 million, which encompasses all fixed costs, the BAT CEO plans to apportion equally (25%) each) among the four types of vehicles the Model Z plant will manufacture.All economic and environmental impact studies have been approved. The size of the plant is predicted to be 420 soccer fields in size (a soccer field is 100 yards wide by 130 yards long). The car sales are expected to be: $30,000 per sedan; $50,000 per sports model; $20,000 per small cargo van; and $40,000 per passenger minivan. It will create 10,000 jobs for Frankfurt and the surrounding areas.There have been some issues with protestors regarding the building of an automotive plant that destroys forestland valued at $350 million.
There has been some rumbling regarding a group called “Save The Forest” that could implement a cease all actions lawsuit against BAT. Research has shown that previous lawsuits and environmental impact has led to years of litigation and legal fees.
The variable costs for the first year’s operation look to be $20,000 per sedan; $40,000 per sports model; $10,000 per small cargo van; and $25,000 per passenger minivan. Sales are expected to be: 40,000 sedans; 5,000 sports cars; 2,000 cargo vans; and 12,000 minivans.Prepare a brief report for the president and CEO of BAT Car Company. Your report should include the following elements:
- an introduction section that describes how the quantitative analysis approach can be applied to this situation;
- BAT’s profit formula results;
- BAT’s break-even point for each vehicle type; and
- your final recommendation on actions to take. (This section should convey to the CEO if the expansion of the production plant is profitable to BAT over the long haul, as well as how to deal with any possible litigation.)
Your final report must be at least three pages in length, and you must show all of your computations