BAXTON TECHNOLOGY

Baxton Technology

Baxton Technology

a) Based on the data for the years 1997, 1998, 1999, evaluate the business performance of Baxton Technology. Given this review what is the unit sales, sales in dollars, contribution and the contribution margin; would you predict for the year 2000. Explain your reasoning.

Baxton Technology Company manufactures surface automotive hoists which are used by garages, service stations and other repair shops to lift cars for servicing. Because of its design, quality of workmanship, safety features; ease of installation and five-year warranty, Baxton Lifts achieved a reputation as the “Mercedes” of the hoist industry and is considered a leader in automotive lift safety in Canada and United States.

There are sixteen firms competing in the automotive lift market in North America. AHV Lifts and Berne Manufacturing together held near 60 percent of market. Baxton Technology has two competitors that manufacture scissor lifts. One is the AHV Scissor Lift, which had a different lifting mechanism without safety locking features and was sold for about 20 percent less than the Baxton Lift. The other competitor is Mete Lift, sold for about 5 percent less than the Baxton Lift.

Baxton Technology has used three types of distribution channels: a company sales force, Canadian distributors and a U.S automotive wholesaler. The company's success to date is based on a strategy of offering a superior product that is primarily targeted to the needs of specific customers. The strategy stressed continual product improvement, quality workmanship and service. And personal selling was a key part of the strategy as well.

1997

1998

1999

2000

Sales

6218000

7454000

9708000

12140658

Cost of sales

4540000

5541000

6990000

8674554

Contribution

1678000

1913000

2718000

3480199

Marketing expenses

507000

510000

530000

541960.2

Administrative expenses

810000

820000

840000

855429.1

Earnings before tax

361000

583000

1348000

2646890

Units sold

723

847

1054

1273.179

Contribution Margin

27 %

26 %

28 %

29 %

The business performance of Baxton Technology from the year 1997 to 1999 vary as the above table is showing that the units sold over the period is increasing that is in 1997, it was 723, 847 in 1998 and 1054 in 1999. In addition to this, the sales of the Baxton Technology are also increasing which were 6218000 in 1997, increased to 9708000 in 1999. In addition to this, the contribution that is the gross profit of the Baxton Technology is also showing growth. Moreover, the contribution margin of Baxton Technology is showing that in 1997 that contribution margin was 26.98 % which increased by 25.66 % in 1998 which further increased by 27.99 % in 1999. Therefore, in 2000, it seems that in the coming future the unit sales, sales of the Baxton Technology, contribution or ...