How many Classic Moana™ dolls must Disney sell to cover its costs of developing the sustainable packaging for the doll? Original blog posting (December.

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Presentation transcript:

How many Classic Moana™ dolls must Disney sell to cover its costs of developing the sustainable packaging for the doll? Original blog posting (December 1, 2016)

Moana™ doll Walt Disney’s new movie, Moana ™, opened in November 2016 Released a doll modeled after the heroine of the movie Smart Packaging Initiative Design for recyclability Responsible sourcing Material optimization Doll packaging 70% recyclable Development costs likely include: engineering, special materials, and marketing

Packaging

Packaging can be made into a boat

Question 1 Would Disney include the costs of developing its SPI tool in calculating the break even volume for its Moana™ doll packaging? Why or why not?

Question 2 Assume that Disney invested $2 million in developing the sustainable packaging for the Moana™ doll and that it has a contribution margin ratio of 40% on its toy line in general. What would be the break even volume of Moana™ dolls for the sustainable packaging development costs? Assume these sustainable design costs are the only fixed costs incurred in the manufacture of the Moana™ dolls.

Question 3 Do you think Disney is motivated by profits only when developing its sustainable packaging? Why or why not?

Question Recap Would Disney include the costs of developing its SPI tool in calculating the break even volume for its Moana™ doll packaging? Why or why not? Assume that Disney invested $2 million in developing the sustainable packaging for the Moana™ doll and that it has a contribution margin ratio of 40% on its toy line in general. What would be the break even volume of Moana™ dolls for the sustainable packaging development costs? Assume these sustainable design costs are the only fixed costs incurred in the manufacture of the Moana™ dolls. Do you think Disney is motivated by profits only when developing its sustainable packaging? Why or why not?

For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Questions or comments? Contact Dr. Wendy Tietz at wtietz@kent.edu