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Attached is the instructions (word document), the case study, and the excel table spreadsheet. Please complete the assignment using Excel (preferred) with formulas showing Thank youCase 5 – FND The Hill Channel Partners. Due Saturday, August 13 Instructions: a. Read case b. Use the Excel File – Case 5 Tables for calculations c. Address the following questions: Summary: FND Hill has two options to enter the small business market – through a partnership or through direct sales. The costs and pricing differs for each approach. Hill Partnership: · Sales price is 35\% lower · Hill would sell and service the products · FND is considering paying commissions to their own sales force Direct Sales · Sales are expected to be 25\% of possible sales through the partnership · Service and sales support costs would be incurred 1. Determine the unit contribution margin for the RX-10 model and for the RX-50 model under the direct-sales approach. 2. Determine the unit contribution margin for each of the two product models selling through the potential Hill partnership channel. Prepare your analysis including and excluding commissions. 3. The Hill partnership has estimated low sales volume of 2,500 and estimated high volume of 5,000 units. The estimated direct sales volume would be 25\% of the Hill partnership. Using your calculations from Questions 1 and 2, above, prepare an analysis of incremental Total Contribution Margin (TCM) for sales through the Hill channel for four scenarios: a. If all Hill sold was RX-10s in a volume of 2,500 units per year. b. If all Hill sold was RX-50s in a volume of 2,500 units per year. c. If all Hill sold was RX-10s in a volume of 5,000 units per year. d. If all Hill sold was RX-50s in a volume of 5,000 units per year. (Those four possibilities should provide good estimates of the minimum and maximum TCM effects of the proposed partnership arrangement.) Note that the case estimates direct sales at 25\% of those sales possible through Hill. In your comparison, use 25\% of the Low & High estimates for the comparable direct sales. 4. Identify the categories of potential differential fixed costs that might arise in pursuing either the direct-sales initiative or the Hill channel partnership. Which are relevant to your recommendation and which are not? (Hint: use the activity based hours and costs for service and sales support, if applicable) 5. Provide an assessment of the role that the sales commission data plays in your overall recommendation analysis. What role should it play, and why? 6. Provide an assessment of the threats associated with partnering with Hill. How does this figure into the decision? Why? Hints: Warranty parts costs (service rate x parts) are considered a variable cost and are applicable in both sales approaches. Sales and service costs are potential incremental fixed costs.Tables Table 1. Basic Information About Herald Products RX-10 RX-50 Position in product line Entry-level Top end Average selling price $ 18,000 $ 150,000 Variable manufacturing costs/unit $ 9,000 $ 63,000 Variable unit installation cost $ 900 $ 1,400 Sales commission rate 5\% 5\% Note: All monetary values are expressed in U.S. dollars. Table 2. Comparative ABC Warranty Service Costs per Average Service Call Fully Loaded ABC Rate Per Productive Hour* ABC Driver Count Product Profiles RX-10 RX-50 Service labor type/class Remote (call center) level 1 $30 0.4 hours 0.7 hours Remote (phone) level 2 $85 0.3 hours 0.8 hours Field technician $130 3.9 hours 6.1 hours Parts $300 $500 Historical service call rate during Warranty 1\% 3\% * Fully loaded costs include salaries or wages plus benefits, employment costs, and the costs of associated dedicated tools and assets for that employee. Productive hours are the hours spent performing the job the employee was hired to do. Table 3: ABC Sales Profile Data Average per Successful Sales Event Fully Loaded ABC Rate Per Productive Hour* ABC Driver Count Product Profiles RX-10 RX-50 Service labor Lead salesperson $125 8.0 hours 24.0 hours Sales support staff $73 5.0 hours 17.0 hours *Fully loaded costs include salaries or wages plus benefits, employment costs, and the costs of associated dedicated tools and assets for that employee. Productive hours are the hours spent performing the job the employee was hired to do. On an annual basis, they are paid hours less holidays, vacation, sick time, training, and administrative compliance hours. For sales, the time consumed pursuing “dead end” leads is included in the successful event averagesINTRODUCTION Big Data and the cloud are the watchwords for the future. The capability to use and store Big Data means ever-increasing demand for state-of-the-art data storage. Our Parallax systems continue to lead the pack. The cloud will bring high demand not only for data storage but also for our industry-leading virtualization software that lets it all happen seamlessly and invisibly to the user. We are positioned for major continued growth as these trends accelerate. The future is bright for FND! In 2004, Raphaella Munoz, vice president and director of the Herald Division of FND Corporation, and her top-management team had just heard those words from Jack Pizzuti, chief executive officer (CEO) of FND. He was speaking from a large auditorium in San Francisco, California, at the headquarters of the Software Division, but his address was webcasted to all of FND’s facilities around the world. Cheering could be heard from the San Francisco audience, but the mood in the Herald Division conference room was much more somber. Herald products had not been mentioned once in Pizzuti’s 45-minute address. Herald made and sold FND’s second-tier storage systems. The systems were very-high quality and led FND’s competitors in terms of reliability and cost of operation, but the systems did not contain the latest leading-edge technology, unlike the Parallax systems. Herald systems were targeted to serve the less-strenuous needs of departmental offices or remote business offices of the Fortune 1000 firms that bought Parallax systems for their corporate data centers. The managers in the room realized that Herald products might be the tier of products most likely to be negatively affected by a trend to cloud storage. Munoz clicked off the webcast and turned to her team. “I have decided that we need to mount a concerted effort to press more strongly into the small-to-medium business (SMB) market. To date, our business has been focused on very large companies. We dominate that market, but it is becoming saturated and is likely to be slowly eroded by cloud-based storage. That is not going to happen very quickly. It will take many years for the majority of organizations to become ready to adopt cloud storage. Most IT (information technology) buyers tend to be quite conservative. But before that happens, we need to strike quickly and expand our market footprint; and the time is now. The big numbers of potential new clients are in SMB. We need to significantly expand our market presence in that segment as soon as possible.” Tina Johnson, chief sales and marketing officer in the Herald Division, reacted first. “You are right. That is a huge market, but it is made up of many quite different subsegments. One of our salespeople just completed a sale to a firm with only 16 employees, but it is an internet-based company and bought 5 of our top-of-the-line RX-50s. That is a $750,00