Chapter 11 Blog

Summary

The article I found talks about how there is a high demand for nuts. China is recently the number one coutry who has an appetite for nuts.China are in such a demand for nuts that they have been contacting producers to buy their crops on the spot with cash. Last year they bought almost one hundred million pounds of pecans. Some North Americans are scared that China will buy out all the nuts and there wouldn't be enough pecans for themselves. The prices of nuts hadn't changed much because sales in North America were steady, but it wasn't until five years ago when China consumers of nuts grew. The prices of nuts now have increase by forty percent. It is quoted that the high demand for nuts is coming from researches that show how nuts increase health benefits. Some industries have sold out every year.

http://www.ctv.ca/generic/generated/static/business/article1762695.html

Connections

The connection between the article and Chapter eleven is showing the benefits for companies with products in high demand. The high demands for nuts from China has increased their prices. If a company has a large inventory, you must have a large number of merchandise to sell. If the companies that sold their nuts to China had a larger number of pounds to sell, they would've made a higher profit than they did. Although nut companies are making a high profit because their nuts are in high demand, it will also increase their Freight-In because China is far away and it will cost a lot of money for the products to be shipped. The conclusion I would make is that industries that grow nuts will have an increase in their Gross Profit because of the high demand, but their Fright-In will also increase because China is a country far away and importing the nuts will cost a lot of money.

Reflection

The article has the idea that if a business selling a product that are in high demand, then their gross profit will increase. If a product is in high demand, it is most likely that the price of the product will increase. Sometimes when the price increases, the product becomes less appealing to customers to buy it. Also, since China is a country that is very far away, it means that the prices for Freight-In will increase too because it will cost a lot of money for the nuts to be sent from Canada to China. The article also shows that as an accountant, you must estimate how many products need to be produced every year like estimating how many products need to be stocked up in inventory. If there is a high demand for a product, there should be a lot in stock to make a higher profit and to increase your Gross Profit.