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ACC 206 Week 5 Final Paper ABC Company Cedar roofing Report New

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ACC 206 Week 5 Final Paper ABC Company Report New
You’ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making
cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year.
The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find
additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities.
As the controller of ABC Company, the CEO has come to you with a new opportunity that he’s been working on. The CEO would like to use
the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be
more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC’s existing manufacturing
facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross
profit to help reach the growth targets. The CEO is relying on you to help decide how this project can be afforded Provide details about the
estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide.
In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the following information (including exhibits,
but excluding your references and title page). Refer to the accompanying Excel spreadsheet (available through your online course) for some
specific cost and profit information to complete the calculations.
In the present assignment we have analyzed ABC Company on
different perspectives in order to help the CEO to come up with new
plans which would help the company in expanding. ABC Company
specializes in manufacturing of cedar roofing and siding shingles and
is currently making annual sales of $1.2 million approximately which
is 25% higher from the last year. Company is targeting $3 million
annual sales within next 3 years. In order to achieve $3 million Sales,
Company have to add new products to its existing product lines. CEO

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has been trying to find additional products which can help company to
raise its revenue and at the same time leverage skillset of the existing
employees and manufacturing facilities.
Cedar Dollhouse is a new product on which CEO has been working,
this product will utilize the shingle scrap material together with other
raw materials. Producing “Cedar Dollhouse” requires additional raw
material, also this additional product will consume substantial time of
the employees and workers. Cedar Dollhouse will help the company
to leverage its manufacturing facilities and current staff, by the help of
this product the revenue is estimated to increase substantially along
with the expenses. We have analyzed the proposal further to
determine, if this product can help the company to reach its target.
Company is planning to add a new product to their existing line of
products; therefore it must assess the risks involved in it. Majorly
there are two types of risks which are involved in here and they are
known as finance risk and business risks.
Business risk is mostly associated with the strategic decisions which
are required so that the organization can work smoothly and profitably

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whereas finance risk is associated with the monetary aspects of an
organization such as its capital structure etc. In order to excel the
market every entrepreneur must manage both these risks very well by
using various risk management techniques.
Business risk can be defined as the risk that the core business
activities of a ABC company are not appropriate such as inefficient
supply chain management system, inaccurate pricing of products
which will bring down the demand of the product, ineffective
production processes etc. These risks directly impact ABC Company
as they are involved in day to day working of an organization. On the
other hand Finance risk can be defined as the risk which is mainly
associated with the capital structure of the ABC company, if ABC is
carrying to much debt than in such case liability of repayment and
interest costs are also high which makes the organization vulnerable
to credit risk.
In order to overcome various business risks faced by the company it
must determine which business strategy it must use. There are majorly
three types of strategies which can be used low cost leadership,
differentiation, and focus strategies.

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