Analyzing Kookabura Cricket Bats Case Study: Profit,

School: Pepperdine University - Course: ACCT 602 - Subject: Accounting

KOOKABURA CRICKET BATS CASE STUDY Financial information provided in the case KahunaBladeTotal Total unit sales (000)603382985 Total revenue (Rs. 000)₹ 1,240,928₹ 428,714₹ 1,669,642 Total cost of sales (Rs. 000)₹ 645,210₹ 188,708₹ 833,918 Advertising / Sales (Rs. 000)₹ 135,396₹ 35,583₹ 170,979 Consumer promotions (Rs. 000)₹ 88,106₹ 59,951₹ 148,057 Trade promotions (Rs. 000)₹ 106,743₹ 36,877₹ 143,621 Other fixed costs (Rs. 000)₹ 129,057₹ 36,441₹ 165,497 Operating profit (Rs. 000)₹ 136,417₹ 71,153₹ 207,570 Big KahunaRead Year 1Year 2Year 1 Predicted unit sales (000)175325850 Wholesale price per unit₹ 2,550₹ 2,550₹ 1,850 Variable cost per unit₹ 1,208₹ 1,208₹ 1,208 Predicted advertising / sales costs (Rs. 000)₹ 53,550₹ 99,450₹ 188,700 Predicted consumer promotion costs (Rs. 000)₹ 31,684₹ 58,841₹ 78,625 Predicted trade promotion costs (Rs. 000)₹ 42,840₹ 79,560₹ 78,625 Other fixed costs (Rs. 000)₹ 46,410₹ 86,190₹ 133,663 Question 1: Pre-Cannibalization Profit for Big Kahuna and Readyplay Calculate the predicted pre-cannibalization profit in years 1 and 2 for Readyplay. Question 2: Unit Contribution Calculate the contribution per unit for Kookabura's existing product—the Kahuna. Calculate the contribution per unit for Kookabura's existing product—the Blade. Now calculate the contribution per unit of the proposed new product-The Big Kahuna. Calculate the predicted pre-cannibalization profit in years 1 and 2 for Big Kahuna. To calculate this profit, you will need to first calculate total predicted revenue, total variable costs, and total fixed costs.In your answer, please highlight the cumulative profit for each proposed new product over two years. Calculate the contribution per unit for the proposed new product-Readyplay. (see Case for more details)

Question 3: Post-Cannibalization Profit Question 4: Value of the Blade to Kookabura Calculate the predicted post-cannibalization profit in years 1 and 2 for Big Kahuna, assuming that (a) the cannibalization rate will be the same in each year, (b) new products will be "charged" for any losses due to cannibalization, and (c) aside from cannibalization effects, demand will remain steady for the original products (Kahuna and Blade) from year 1 to year 2. (see Case for more details on this question) Calculate the predicted post-cannibalization profit in years 1 and 2 for Readyplay with the same assumptions as above. In one of the scenarios you considered in the previous question, Kookabura would offer three products in its portfolio of products: Kahuna, Blade and Readyplay. Considering the cost of cannibalization you calculated for the Readyplay in Year 2, how valuable would the Blade be to Kookabura's portfolio of products, given the effect of this cannibalization?