Name : Farjana Rahman

Course : ACN 202

ID: 1711205
Section : 07
Submission date : 19 /04 / 2021
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Table of content:
Company History : 3

Question number 1 : 4

Question number 2 : 4

Question number 3 : 5

Question number 4 : 5

Question number 5 : 5

Question number 6 : 6

Question number 7 : 7

Question number 8 : 7

Question number 9 : 7

Reference : 8
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Company History:
Jennifer Ger and Suzie Chemel believed that life, like fashion, should be fun, bright, and full of
excitement.  Foxy Originals (Foxy) was founded on this belief. The owners’ goal was to create unique
and playful jewelry pieces that would help women everywhere find their own way to sparkle and shine ––
without breaking the bank. Both partners possessed experience in the jewelry industry prior to launching
Foxy. Chemel’s parents owned a metal manufacturing company that made jewelry and medals for
companies and community groups, and Chemel had been involved in this family business from a young
age. Ger had been designing and selling her own line of necklaces since she was 16 years of age.   In
1998, while attending Western University, Ger and Chemel started Foxy. Prior to graduation, Ger and
Chemel spent their summers attending various outdoor festivals and summer concerts to promote and sell 
  pieces from their collections. Foxy jewelry was primarily targeted to young, professional women
between the ages of 20 and 45. After very positive sales results, the partners decided to turn Foxy into a
full-time endeavour upon graduation from the Ivey Business School.  With growing popularity and
demand from festivals and summer concerts, Ger and Chemel began selling a separate line of jewelry to
retail stores. Each retail account took a significant amount of time and effort to develop since the partners
personally contacted and met with each Canadian retail store’s product buyer. In the first three years of
operations, Foxy’s sales had doubled every year, and thereafter continued to grow at  a rapid pace. Ger
and Chemel were very enthusiastic about their designs; they displayed high energy and had a thorough
knowledge of their products. Canadian retailers often placed orders for Foxy jewelry after meeting these
dynamic owners. Prior to expanding their business into the United States, the partners managed all
operations.  Upon Foxy’s expansion into the United States in fiscal 2005, Ger and Chemel continued to
attend trade  shows, but they also hired sales representatives to sell directly to boutique owners and run
trade shows  across the United States on the partners’ behalf, thereby promoting greater exposure for the
Foxy brand.  During the first fiscal year of U.S. sales, 10 per cent of Foxy’s overall sales came from the
United States and 90 per cent came from Canada. By fiscal 2007, due to the significant number of
boutiques carrying the Foxy line in the United States, U.S. sales accounted for 70 per cent of Foxy’s total
sales.  In 2009, in addition to their retail locations, Ger and Chemel began selling their products online
directly to the end consumer. End consumers could purchase pieces from any Foxy collection online for
the same price as the pieces were sold in retail locations. Online sales represented 15 per cent of overall
sales in fiscal 2013.  

Question no 1 :Assess each distribution strategy from a qualitative point of

view.

Answer :Trade show distribution needs a much busier and more demanding work schedule. This was
busier for ger and chemel before their personal lives became more important with marriage and family.
The trade shows allowed for direct conversation with businessbuyers, which allowed for higher volumes
of product sold in large quantities. Selling directly to businesses was a very profitable decision by the
owners. Their expansion into the united states in which they sold directly to customers would lead to the
us sales accounting 70% of Foxys total sale. The owners shifted their focus to online sales after their
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family lives become a bigger priority. This required a significant change in the company’s operations they
no longer sold bulk to retailer but sold directly to the end consumer. The move to online sales allowed
foxy to finally sell to consumers outside the USA and Canada. However, the online sales market would
require lots of advertising to take place via social media, convincing the everyday consumer to purchase
foxys jewelry is a very different task than selling retailers.

Question number 2 : Identify all costs, other than variable costs, for the
trade show distribution strategy. Categorise these costs as investments or
fixed costs (per trade show and for FY 2014/15)

Answer :

 Preparing a booth $ 4000= Investment

 Registration cost $3000 = Fixed cost
 Shipping cost for the booth = Fixed cost
 Travel cost for 2 $ 1000 each = Fixed cost
 Promotional materials and product samples $ 2800 = fixed cost

Question number 3 :If the partners decide not to attend the trade shows,
what is the total available increased amount for the online marketing
campaign for FY 2014/15?
Ans :

Amount
10 shows $3000 per registration per show $30000
Shipping booth $1500 per show $15000
Travel expenses $2000 per show $1000 for each partner $20000
Promotional materials $2800 per show $28000
Depreciation $133 per show $1333.3
$94333.3
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Question number 4 :Do the variable costs for both products (necklaces and
pairs of earrings) differ between trade shows and online sales? By how much
does it differ, if it does differ?
Ans :

I think it is No. as the shipping is not count the only variable cost is :

Amount
Necklaces $8.05
Pairs of earrings $5.5

Question number 5 :Calculate the variable costs per order incurred at a trade
show and the variable cost per order in online order.

Ans :

Variable cost per order :

Trade :

(25 necklaces + 12 earrings ) per order = { (25*8.05)+(12*5.5)=267.25}

Online :

(2 necklaces + 1 earrings ) per order = { (2*8.05)+(1*5.5) = 21.6}

Question number 6 :For each distribution strategy, calculate the unit

contribution and the contribution margin rate for each of the two product
lines (necklaces and pairs of earrings). What is the weighted average
contribution margin rate for an order at the trade show and online order?
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Ans :

Trade show :

Necklaces Earrings
Unit contribution (17- 8.05= 8.95) (12- 5.5 = 6.5)
(Selling price – variable cost)

Equation
Unit contribution by order {(25*8.95) + (12*6.5)} = 301.75

Necklace Earrings
Contribution margin rate (8.95/17= 52.65%) (6.5/12 = 54.17%)
(unit contribution/selling price)

Equation
Weighted average contribution margin rate {25/(37*52.65%)}+{12/(37*54.17%} = 53.14%

Online :
Necklaces Earrings
Unit contribution (34-8.05 = 25.95) (24-5.5 = 18.5)
(selling price- variable cost )

Equation
Unit contribution by order {(2*25.95)+(1*18.5)} = 70.4

Necklaces Earrings
Contribution margin rate (25.95/34)= 76.32% (18.5/24) = 77.08%
(unit contribution/selling price)

Equation
Weighted average contribution margin rate {2/(3*76.32%)}+{1/(3*77.08%)} = 76.57%

Question number 7 :Calculate Foxy’s Break-even point for each

distribution strategy.
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Ans :

By trade show By online

Break even in sales dollars (94300/53.14%) = (93000/76.57%)=
(total fixed cost/weighted average margin 177445.8498 121452.2027
ratio)
Break even in orders (94300/301.75)= 312.51 (93000/70.4) = 1321.02
(Total fixed cost/unit contribution )

Question number 8 :Which distribution channel is projected to be more

profitable in 2015?

Ans :

For online :

High 5 % Low 3%
Total revenue ( 4429*22) 407429 244457.143
Total fixed variable cost 95666.4 57394.2857
4429*{(2*8.05)+(1*5.5)
Total fixed cost 93000 93000
Profit (Loss) 218762 94063

For Trade :

High 45 Low 20
Revenue per order 45 20
Unit revenue 569 569
Total revenue per show*10 25605 11380
Reorder 256050 113800
(-) Total variable cost 256050 113800
(-) Total fixed cost 240525 106900
Profit (Loss) 94333 94333
177242 26367

Question number 9 : As per Ger and Chemel, perform relevant analysis

and give a final decision. Support your decision with relevant
justifications.

Ans:
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Ger and Chmel I choose the trade option because this analysis from above we can see that both is loss
but the trade is less loss than the online market option.so we can say that the trade option is more better
than this online option we should go for this trade option to expand this business.

Reference :
 https://pdfweek.com/downloads/chapter%209%20managerial%20accounting
%20soluStions%20pdf