Healthy Spring Water Company

Do you ever wonder about the origin story behind the brands that we use in our everyday lives? Well there is a story behind the founding of Deer Park Water Company. After the Civil War, the Deer Park Hotel was built in the Appalachian Mountains located in Maryland by the Baltimore and Ohio Railroad. The hotel was created to attract those who took passage on the railroad, but the spring that was located nearby also caught the attention of the travelers. The spring was known for the appeal of a clean source of water, this led the Baltimore and Ohio Railroad to start putting the water into bottles in 1873. It was known as the “Boiling Spring” because the water comes through sand on the way up. A company, known as The Boiling Spring Holding Corporation, purchased the spring and the woods surrounding it in 1966. The Boiling Spring Holding Corporation decided to put the spring to a use and made a profit bottling up the water and selling it mainly throughout the New York area, until production eventually expanded across the nation. Most of the water in the spring is located near the Appalachian Trail. Something interesting about the Deer Park Hotel is that President Taft and his wife had their honeymoon there. Deer Park Water Company is a sub-corporation of the Nestle Waters North America Company. Nestle Waters North America was founded in 1976 and started out importing Perrier Sparkling Water before moving on to include regular bottled water. At the time that the company was first

d) Break even sales change that would change the profits by the same amount as a reduction in price.

Breakeven Analysis for Product Tylenol Approach 1 - Same price as Tylenol Approach 2a - Cheaper than Tylenol Approach 2b - Cheaper w/lowered trade cost $ $ $ $ Unit Cost (Variable Cost) 0.60 0.60 0.60 0.60 Trade Cost (Selling Price to Retailers) $ 1.69 $ 1.69 $ 1.05 $ 0.70 Fixed Cost (Advertising) 2,000,000 6,000,000 6,000,000 6,000,000 Break-Even Quantity [Fixed Cost/(Trade Cost-Unit Cost)] 1,834,862 5,504,587 13,333,333 60,000,000 Contribution Margin (Unit) 64% 64% 43% 14%

In the worst case scenario, we assume there is a 5% fluctuation in unit sale price and unit variable

Elimination of sales commision would affect the break-even volume to decrease, since the selling staff would have a lower incentive to sell due to having a cut of their commision salary. Eventually, this process would see a decrease in profit, since there would be no longer same selling jewellery incentive as before when the staff was paid in commissions. Therefore we strongly recommend to management to maintain selling commissions to to allow for an increased motivation, which would see an increased in the profit.

Billions of gallons of bottled water are consumed in the United States every year. Many Americans choose bottled water for its convenience and say that the taste is much better than tap water. They say tap water is flat and tasteless. Some argue that the cost of bottled water far exceeds the cost of tap water. One study showed that one bottled water per day would cost the consumer $365 per year while the same amount of tap water would cost ten cents. While bottled water is more expensive, it provides over 130,000 jobs resulting in over six billion dollars in salaries for american workers “Bottled Water Matters.” In the article, “ Bad To The Last Drop,” Tom Standage says that bottled water is too expensive and encourages people to stop buying bottled water and give the money to charity. In the article “ In Defense of Bottled Water,” Thomas J. Lauria says that eliminating bottled water would have the unintended consequence of driving people to choose more unhealthy beverages which have thicker plastic bottles and would be worse on the environment. He also says that bottled water is an important choice in situations where there is a lack of tap water or concern about water

Although the financial goal is to create profit, we need to calculate the breakeven point to get started.

Variable Cost defines the cost of a single assembled product based on the materials consumed and labor invested directly in unit production. To illustrate our point, we can say that making a single baked potato with all of the fixings will cost $3.00 to produce (potato, sour cream, chives, plate, fork, napkin and labor). If we decide to go into the baked potato business, we must then sell these potatoes for at least $3.00 per unit. Any less would cause us to lose money on the endeavor. This cost cannot be made up by increasing volume of sales. Judy Koch discussed the fact that bulk purchases can benefit you reduce these variable costs. If we decided to purchase potato-making materials in larger quantities and hired more workers to produce these products, we could

Determine the unit break-even point, assuming fixed costs are $60,000 per period, variable costs are $16.00 per unit, and the sales price is $25.00 per unit.

* He has also assumed that the sales mix will remain constant. Total revenue and total expenses behave in a linear manner over the relevant range.

= Unit Selling Price – Unit Variable Cost = $9.00 – ($1.25 + $0.35 + $1.00) = $6.40

A variable cost is a corporate expense that varies with production output. Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases (Variable Cost, n.d.); in the case study for all cost per event such

As an example, if fixed costs are $100, price per unit is $10, and variable costs per unit are $6, then the break-even quantity is 25 ($100 ÷ [$10 − $6] = $100 ÷$4). When 25 units are produced and sold, each of these units will not only have covered its own marginal (variable) costs, but will have also have contributed enough in total to have covered all associated fixed costs. Beyond these 25 units, all fixed costs have been paid, and each unit contributes to profits by the excess of price over variable costs, or the contribution margin. If demand is estimated to be at least 25 units, then the company will not experience a loss. Profits will grow with each unit demanded above this 25-unit break-even level.

Break Even Point in Sales = (Total Fixed Costs + Target Profit) ÷ Contribution Margin Ratio

sales volume ⎞ ⎛ unit variable sales volume ⎞ ⎛ unit fixed ⎜ ⎟ −⎜ ⎟ − ⎜ sales price × ⎟ ⎜ expense × ⎟ expenses = 0 in units ⎠ ⎝ in units ⎠ ⎝