Red Brand Canners

Red Brand Canners

And Monday, September 13, 1965, Mr. Michael Gordon, Vice President of operations, asked the Controller William Cooper, the Sales Manager Charles Myers, and Dan Tucker the Production Manager to meet with him to discuss the amount of tomato products to pack that season. The tomato crop, which had been purchased at planting, was beginning to arrive at the cannery, and packing operations would have to be started by the following Monday. Red Brand Canners (RBC) was a medium-size company that canned and distributed a variety of fruit and vegetable products under private brands in the western states.

Cooper and Myers were the first to arrive in Mr. Gordon’s office. The production manager came in a few minutes later and said that he had picked up produce inspection’s latest estimate of the quality of the incoming tomatoes. According to their report, about 20% of the crop was grade ‘A’ quality and the remaining portion of the 3 million pound crop was grade ‘B’.

Gordon asked Myers about the demand for tomato products for the coming year. Myers replied that they could sell all of the whole canned tomatoes they could produce. The expected demand for tomato juice and tomato paste, on the other hand, was limited. The sales manager then passed around the latest demand forecasts, which is shown in

Exhibit 1. He reminded the group that the selling price has been set in light of the long-term marketing strategy of the company, and potential sales have been forecasted at these prices.

Bill Cooper, after looking at Myers’ estimates of demand said that it looked like the company “should do quite well on the tomato crop this year.” With the new accounting system that had been set up, he has been able to compute the contribution for each products, and according to his analysis the incremental profit on the whole tomatoes was greater than for any other tomato products. In May, after RBC had signed contracts agreeing to purchase the grower’s production...