Tradi Salad Cost Control

+ CC- 07 Management Control

+
"Tradi-Salad" Case

STUDENT NAME

STUDENT ID

November 10 & 12, 2011

+ The Case
The environment: High Growth phase - more working mothers - more disposable income - more choices in convenience food products - market potential

Consumer Behavior: - the Danish housewife often serves the sliced pork with gravy along with Red cabbage salad - the habit of preparing the Red Cabbage salad at home could change; sales of ready-made Red Cabbage salad are expanding rapidly (marketing dept) Competition: - a large competitor is known to be preparing the launch of an equivalent meal

+ The Company
 Tradi-Salad is specialized in branded vacuum-packed meat and other food meat-based products Introducing a SPECIALITY LINE OF COMPLETE MEALS, to be sold in attractive carton, with the “Sliced Pork Gravy with Red Cabbage” as a first product Objective: consider this new product/productline as a potential growth source AND an opportunity to test Market answers to such products.

 Portfolio of 30 products with a very popular vacuum-packed sliced pork in gravy

 Competition will introduce “complete meal” (threat of losing market share if Tradi-salad does not do the same)

+ The launch dilemma
FINANCE department


MARKETING department
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Retail Price Price to D.M Total V.C Total F.C Production Advertising S & Admin exp Total COST

€ 8.20 € 5.26 € 3.23

Retail Price Price to D.M

€ 6.85 € 4.40

 



Total V.C Total F.C Production Advertising S & Admin exp
Total COST PROFIT

€ 3.23
€ 0.54 € 0.30 € 0.19 € 4.26 € 0.14

€ 1.20 € 0.30 € 0.23
€ 4.96

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 

 

PROFIT € 0.30

+ PART I - Marketing Rationale
Marketing went for a Marginal Costing approach for the cabbage salad: they did not account for any Production Fixed Expenses for the cabbage, keeping only that of the 450g of Pork, i.e. €0.54 (as per the €1.2/kg company rule) Overhead Calculation Any Tradi-salad product abides by a €1.20/Kg... [continues]

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