KZ Coffee Bean, Inc. Our specialty blend coffee has been a smashing success in terms of customer feedback.Folks just love it.But this success is simply nowhere to be found in our financials.I don’t know what to do.Maybe we should consider closing down this product line and refocusing our production on regular and premium coffee. James Kyle, CEO of KZ Coffee Bean KZ Coffee Bean, Inc. (KZCB) is a processor and distributor of a variety of different blends of coffee. The company buys coffee beans from around the world; it then roasts, blends, and packages the beans for resale. Currently, KZCB offers its products to gourmet shops in 1-pound bags. The blends are classified as either regular or premium. The regular blends are popular and sell in large volumes while the premium blends sell in low volumes. Additionally, KZCB sells specialty blend coffee exclusively to coffee shops in 20-pound bags. Although the major cost for KZCB is the cost of the beans, there is a substantial amount of manufacturing overhead in the predominantly automated roasting and packing process. KZCB prices its coffee based on budgeted full cost (i.e., including allocated overhead). The company aims for a gross margin of 20% from the specialty blend and 25% from the other blends. If prices for specific coffees are significantly higher or lower than the market, the prices are adjusted accordingly. Although the company competes primarily on the quality of its coffee, its customers are price conscious and the company must respond accordingly. Existing Cost System at KZCB The existing cost system at KZCB traces the direct material costs and the direct labor costs to the associated products. Additionally, the system allocates overhead based on direct run labor hours. The budgeted operating income statement for KZCB in 2019 is provided in Exhibit 1.Exhibit 2 provides cost and profit margin information for the three coffee products in 2019. A New Cost Study Frank Smith, a board member of KZCB, is trying to develop recommendations about which products to allocate more resources to and which products should be dropped or altered to improve profitability. In order to more precisely assess each product’s performance, Mr. Smith hired an outside consultant to conduct a new cost study which reveals the following information: Set up labor is typically used each time a production run is initiated. The cost seems to be related to the number of labor hours used during the set-up process.Quality control processes are performed after each production run. During this process, a sample of coffee beans is analyzed for texture, color, and potential brewing quality.Each time an order is received, coffee beans and other materials must be picked and organized for the customer.Actions related to packing and shipping are performed each time a shipment is made to a customer. Approximately the same amount of effort is exerted regardless of the size of the shipment.Engineering costs are related to engineering staff’s workload. The wear on the machine, as estimated by machine overhead, is related to the number of hours that the machine is in use. Exhibit 2 contains some of the operating data the consultant compiled for 2019. Recent Development While Specialty blend has generated quite positive feedbacks from customers, its profitability significantly lags behind the other two product lines. This is particularly puzzling to James Kyle, CEO of KZCB, who believes that the company should have a comparative advantage over its competitors due to its state-of-the-art production facilities. However, maybe the company would be better off reallocating the resources to the regular and premium brands and expanding these products’ markets. Finally, KZCB is currently considering whether to simultaneously launch two new lines of coffee: F1 and F2. If launched, KZCB will contract an external manufacturing company to make these new products, and the anticipated selling price per pound of coffee is $19 for F1 and $28 for F2. KZCB estimated that its variable cost per pound is $15 for F1 and $20 for F2, respectively. In addition, it is believed that on average a customer will purchase 3 pounds of F1 for every 1 pound of F2. The only other cost is a one-time contract fee paid to the external supplier in the amount of $2,000,000. Exhibit 1: 2019 Budgeted Operating Income Statement Revenues $4,990,000 Costs Direct Labor $225,200 Direct Materials $1,900,000 Overhead Set-up $3,000 Quality Control $70,000 Receiving $315,000 Packing Engineering Machine Costs $260,000 $352,000 $700,000 Total Overhead $1,700,000 Operating Profit $1,164,800 Exhibit 2: Cost and Profit Margin under Existing Cost System Specialty Regular Premium Price per pound $7.50 $7.80 $11.50 Cost per pound $6.27 $5.85 $8.14 Profit per pound $1.23 $1.95 $3.36 Profit Margin % 16.4% 25.0% 29.2% Exhibit 3: Operating Data for 2019 Specialty Regular Premium Total Budgeted Number of Pounds of Coffee Sold 200,000 300,000 100,000 600,000 Actual Number of Pounds of Coffee Sold 200,000 400,000 100,000 700,000 Budgeted DM Cost per pound of Coffee Sold $2 $3 $6 Budgeted Number of Orders 5 18 100 123 Budgeted Number of Production Runs 1 3 10 14 Budgeted Number of Shipments 1 5 20 26 Budgeted Set-up Labor Hours 10 90 1,100 1,200 Budgeted Direct Run Labor Hours 5,000 5,010 1,250 11,260 Budgeted Machine Hours 2,500 5,010 2,500 10,010 Budgeted Engineering Staff % Workload 25% 35% 40% 100% Budgeted Selling Price per pound $7.50 $7.80 $11.50 Budgeted Labor Rate $20 per hour

InstructionsDevelop a visual communication bulletin (a one-sided, 8.5 x 11 flier suitable for reduction and/or digital sharing and capable of being shared via digital and new media formats) in order to create awareness and engage disinterested parties to a public issue via one of the provided scenarios. Review module resources and online examples of strategic best practices by contemporary communicators. This milestone will allow you to demonstrate your ability to be innovative and creative in your approach to engaging non-receptive parties as outlined in the Final Project I: Visual Strategic Communication Portfolio.GUIDELINES ATTACHEDResources:Textbook: Managerial Communication: Strategies and Applications, Chapter 6PDF: Persuasion in the Media Age, Chapter 6 “Persuasion & Visual Images," pp. 154–181Article: 6 Powerful Reasons Why You Should Include Images in Your Marketing InfographicThe article by the renowned media strategist Jeff Bullas explains the use of images in a digital environment and their ability to drive traffic and prompt engagement.Article: The Power of Visual StorytellingThis article by Getty Images discusses the use of authentic and culturally relative visuals to reflect the human experience and provide visual storytelling.Article: The Power of Infographics: Why, What and HowThis blog article by Infogram, recipient of top innovator and best start-up overall awards, explains the powerful use of infographics to combine data and visual images to make it easier for audiences to digest, remember, and share.Article: Ten Characteristics of a Logo that EnduresThis article provides a summary of Jack Gernsheimer’s ten attributes that a good logo should possess. Gernsheimer is a noted designer of Fortune 500 brand and identity campaigns.Website: Ad Council: Our CampaignsThis website offers the campaigns of the Ad Council and offers television, web, and radio ads for a select number of public issues. These campaigns are created to stimulate action through communication programs in efforts to make a measurable difference in contemporary society.Video: David Griffin: How Photography Connects Us (cc) (14:53)This TED Talk features National Geographic’s director of photography David Griffin and explains how photography can compel us to confront controversial issues, make a real connection to people, and be employed as a positive agent for understanding the challenges and opportunities facing our world today.Video: The Power of Images and Symbols (cc) (2:27)This brief video shows well-known logos and images and allows viewers to see the connection, emotions, and meaning that these visual images evoke.