On the basis of the analysis a decision should be made on whether this offer is profitable for the
company.
A German wine importer receives through a trade broker an offer to supply 41,000 liters of high quality
Moroccan red wine spilled in barrels, for a total price of $ 22,350 (taking into account the 4%
commission of designated broker).
Moroccan wine of similar quality will be in demand in the German market provided that the cost of one
bottle of 0.7 liters costs less than € 3.5. In addition, the importer has its future costs taking into account
the cost of maintaining its own warehouse in Hamburg, which costs € 3.0 thousand. At the same time it
receives a proposal from the forwarding company transporting wine from the plantation to the Hamburg
warehouse inclusively which costs € 8550.
After importing the insurance company receives a proposal for an agreement on the payment of
insurance premiums of € 410 depending on the rental value of a warehouse in Hamburg.
Transportation overheads are € 680, the total cost of customs clearance in Germany and Morocco is €
1250. Other costs, including the procedure for obtaining a certificate of quality, are € 530.
In a warehouse in Hamburg natural losses are 220 liters. In addition, bottling wine in bottles of 0.7
liters, labeling are provided in a warehouse in Hamburg which requires additional expenditure of €
9,700.
The importer calculates the amount of profit which is 20% of the cost, while it provides its wholesalers
with a 4% quantity discount and the average interest rate is 10%. The duration of the transportation to
Hamburg is 15 days, the period from dispatch of wine to its readiness for selling is 25 days and storage
time is 42 days. Exchange rate (USD / Euro) = 0.99
Tasks:
1. Calculate the value of the product in a warehouse in Hamburg.
2. Calculate sales price of a bottle of wine (0.7 liters) at which products will be in demand in the
German market. Make a decision on whether this offer is profitable for the company.