Author: Joyce Buda


ACCT640 – Managerial AccountingFall 2013Case #3 – Performance Drinks - A further study of:Regression AnalysisContribution Margin ReportingCost-Volume-Profit AnalysisDifferential AnalysisCapital BudgetingWritten by:Tim Bergsma, CMA, CFEAssistant Professor – AccountingDavenport UniversityDonald W. Maine – College of BusinessEmail: tbergsma@davenport.edu1Background:Performance Drinks, LLC is owned by Dave N. Port. Performance Drinks produces avariety of sports centered drinks. They began operations in 1993 shortly after Mr. Port graduatedwith his M.B.A. from Davenport University. The company saw early success as sports andfitness nutritional products gained new popularity in the 1990’s. Financially the company issound and has been wise in controlling their growth over the years. However, within the last 18months Mr. Port has noticed a drop in overall company profitability. This is especially troublingconsidering that the company has continued to experience top-line growth. Mr. Port and hismanagement team have been considering developing a new product line. However, those planshave been put on hold until they can figure out why their profits are shrinking.Performance Drinks makes four different kinds of sports drinks. Those drinks are asfollows:BasicHydrationIntensityPost-WorkoutEach of these drinks contains a slightly different nutritional profile and is targeted fordifferent users and uses. The Basic drink has the least nutritional benefit and is targeted forgeneral consumption. The Hydration product targets endurance athletes and specializes inhydration replacement. The Intensity product was designed with energy enhancement in mind. Itserves the needs of extreme athletes who need long durations of sustained energy. Lastly, the

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