...Q#1 What are the assumptions implicit in Bill French’s determination of his company’s break-even point? 1. He assumed average details of all the company’s products combined in one break-even point. NO break-even point for individual product. 2. Next year’s profit is assumed based on same level of targets, without considering other plans for the products, additional dividends or additional variable cost due to union demand. Q#2 On the basis of French’s revised information, what does next year look like? Changes for next year: a. Boost sales by 20% at 90% capacity b. Fixed cost to increase by 60,000/month c. Last year’s profit = 900,000 To add 50% to 300,000 dividends 600,000 after tax d. Company’s profit to be considered fixed cost e. Shift assets of product A to C (w/ union) | Aggregate | “A” | “B” | “C” | Actual Sales Volume | 1,800,000 | 400,000 | 400,000 | 1,000,000 | Unit Sale Price | 7.93 | 10.00 | 9.00 | 4.80 | Total Sales Revenue | 13,360,000 | 4,000,000 | 3,600,000 | 5,760,000 | Variable Cost per Unit | 4.50 | 7.5 | 3.75 | 1.50 | Total Variable Cost | 6,000,000 | 3,000,000 | 1,500,000 | 1,500,000 | Fixed Cost | 4,770,000 | 710,000 | 1,560,000 | 2,500,000 | Profit | 2,590,000 | 290,000 | 540,000 | 1,760,000 | | | | | | | | | | | A. BEP =Fixed cost/ contribution margin = 4,770,000 / 3.43 = 1,390,670.50 B. What level of operation must be achieved to pay extra dividend, ignoring union demands? Target profit = 2,740,000 = [...
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...11 178202 BILL FRENCH, ACCOUNTANT Bill French pegou o telefone e ligou para seu chefe, Wes Davidson, "controller" da Duo-Products Corporation. "Wes, estou pronto para a reunião de hoje a tarde. Elaborei uma série de gráficos de ponto de equilíbrio que irão realmente surpreender o pessoal - e acho que eles também poderão entendê-los". Após conversarem sobre outros assuntos, o telefonema foi concluído e French voltou aos seus gráficos para dar os últimos retoques antes da reunião. French fora contratado há seis meses como contador geral. Ele estava diretamente subordinado a Davidson sendo que, até a época deste caso, estivera envolvido em tipos rotineiros de análises. French era formado em administração, sendo considerado por seus colegas como bastante capaz e extremamente consciencioso. Era esta última característica que aparentemente o levava a ser extremamente severo com seus pares. French tinha plena consciência de suas capacidades aproveitando toda oportunidade que surgisse para tentar ensinar aqueles que o cercavam. O convite de Wes Davidson para French comparecer a uma reunião informal da Diretoria tomou de surpresa alguns do grupo de contabilidade. No entanto, quando French pediu permissão para apresentar as conclusões de sua análise, utilizando gráficos de pontos de equilíbrio, Davidson concordou. A Duo-Products Corporation nunca havia utilizado este tipo de análise em suas revisões ou programas de planejamento. Basicamente, o que French havia feito fora determinar...
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...Managerial Economics MBA 204 030 BILL FRENCH, ACCOUNTANT Bill French picked up the phone and called his boss, Wes Davidson, controller of Duo- Products Corporation. “Say, Wes, I’m all set for the meeting this afternoon. I’ve put together a set of break –even statement that should really make the boys sit up and take notice- and I think they’ll be able to understand them, too.” After a brief conversation about other matters, the call was concluded and French turned to his charts for one last check-out before the meeting. French had been hired six months earlier as a staff accountant. He was directly responsible to Davidson and, up to the time of this case, had been doing routine types of analysis work. French was an alumnus of a liberal arts undergraduate school and graduate business school, and was considered by his associates to be quite capable and unusually conscientious. It was this latter characteristic that had apparently caused him to “rub some of the working guys the wrong way,” as one of his co-workers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Wes Davidson invitation to French to attend an informal manager’s meeting had come as some surprise to others in the accounting group. However, when French requested permission to make a presentation of some break –even data, Davidson acquiesced. The Duo-Products Corporation had not been making use of this...
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...1) * * Ele assumiu que há apenas um ponto de equilíbrio para a empresa ( pela média dos 3 produtos) * Ele também assumiu que o mix de vendas permanecerá constante * Ele também assumiu que o mix de vendas permanecerá constante . A receita total e as despesas totais se comportam de forma linear ao longo do intervalo relevante * Uma vez que a capacidade está sendo expandida para aumentar a produção de Produto C , pode -se supor que este aumento deverá ser atribuído a este produto. Produção de Produto A está a ser reduzida, mas o seu nível de custos fixos tem sido assumido como sendo inalterada 2) Cálculo do break even point usando as novas estimativas: Pontos de equilíbrio foram calculados utilizando as fórmulas : Ponto de equilíbrio do Número de unidades = Custos fixos / margem de contribuição por unidade Margem de contribuição por unidade = preço de venda - custo variável unitário | Aggregate | "A" | "B" | "C" | Vendas em plena capacidade (unidades) 2000000 Volume de Vendas (unidades) 1750000 | 400000 | 400000 | 950000 | Unidade do preço de venda $6,948 | $10 | $9 | $4,8 | Receita de Vendas ...
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...Table of Contents Issues 1 Facts 1 Analysis 2 Conclusion/Recommendations 4 References/Bibliography 5 Issues 1. What are the assumptions implicit in Bill French’s determination of his company’s break-even point? 2. On the basis of French’s revised information, what does next year look like: a) What is the break-even point? b) What level of operations must be achieved to pay the extra dividend, ignoring union demands? c) What level of operations must be achieved to meet the union demands, ignoring bonus dividends? d) what level of operations must be achieved to meet both dividends and expected union requirements? 3. Can the break-even analysis help the company decide whether to alter the existing product emphasis? What can the company afford to invest for additional “C” capacity? 4. Why is the sum of the three break even analysis volume from Exhibit 3 not equal to the 1,100,000 units aggregate break-even volume? 5. Is this type of analysis of any value? For what can it be used? Facts Bill French was a staff accountant for six months at Duo-Products Corporation. As a staff accountant he was reported directly to the company’s controller Wes Davidson and performed routine analytical work for him. French was the invited to an informal manager’s meeting. However, French wanted to present certain break-even data during the meeting. As part of his presentation he used the following information: plan capacity of 2 million per year, past year’s level...
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...BILL FRENCH Bill French picked up the phone and called his boss, Wes Davidson, controller of Duo-Products Corporation. “Wes, I’m all set for the meeting this afternoon. I’ve put together a set of break-even statements that should really make people sit up and take notice – and I think they’ll be able to understand them, too.” After a brief conversation, French concluded the call and turned to his charts for one last checkout before the meeting. French had been hired six months earlier as a staff accountant. He was directly responsible to Davidson and had been doing routine types of analytical work. French was a business school graduate and was considered by his associates to be quite capable and unusually conscientious. It was this later characteristic that had apparently caused him to “rub some of the working folks the wrong way,” as one of his coworkers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Davidson’s invitation for French to attend an informal manager’s meeting had come as a surprise to others in the accounting group. However, when French requested permission to make a presentation of some break-even data, Davidson acquiesced. Duo-Products had not been making use of this type of analysis in its planning procedures. Basically, what French had done was to determine the level at which the company must operate in order to break even. As he put it, The...
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...Case Study Analysis : Bill French Based on Break Even Point INTRODUCTION * Bill French was a Staff Accountant in Duo-Products Group. * He used to report directly to his boss, Wes Davidson(Comptroller). * He wanted to do use Break-even analysis for the planning procedures, which was first of its kind for the Duo-Products Group. * Basically what French had done was to determine the level at which the company must operate in order to break even. * As he put it, 1. The company must be able at least to sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. 2. Further, it will not make a profit unless it covers the fixed costs as well. 3. The level of operation at which total costs are just covered is the break-even volume. 4. This should be the lower limit in the planning. ACCOUNTING RECORDS * The accounting records had provided the following information that French used in constructing his chart: 1. Plant Capacity -2 million units per year. 2. Past year’s level of operations - 1.5 million units. 3. Average unit selling price - $7.20. 4. Total fixed costs - $2,970,000. 5. Average unit variable costs - $4.50. * From the above information, French observed that 1. Each unit contributed $2.70 to fixed costs after covering its variable costs. 2. For break even, unit sold must be 1,100,000. 3. As variable costs per unit is 62.5% of the...
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...Highway, CSEZ, Angeles City, Pampanga BILL FRENCH CASE ANALYSIS Calamiong, Yna Marie Espejo, Jean Macabuhay, Minorka Salenga, Darlene Samia, Mark Valloyas, Hazel Marie BACKGROUND OF THE STUDY Bill French is a staff accountant at Duo Products Corporation. He has been doing routine types of analytical work and is reporting to his boss, Wes Davidson; a controller of the said company. French was a business school graduate and was considered by his associates to be quite capable and unusually conscientious. It was this latter characteristic that had apparently caused him to “rub some of the working folks the wrong way,” as one of his co-workers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Davidson’s invitation for Bill to attend an informal manager’s meeting had come as a surprise to others in the accounting group. However, when French requested permission to make a presentation of some breakeven data, Davidson agreed. Duo Products had not been making use of this type of analysis in its planning procedures. Basically, what Bill French had done was to determine the level at which the company must operate in order to break even. According to him, the company must be able to at least sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. In addition to that, according to French, it will not make a profit unless it covers...
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...Strategic cost analysis & management: Case Study Bill French Accountant Takeaways Bill French, aggregated BEP basic Sales volume Unit sales price (+) Sales revenue Unit var. cost (-) Total VC (=) Contribution margin (-) Fixed cost (=) Operating profit (-) Taxes (=) Net Profit after taxes Dividends (=) Net Profit 1 076 406 1,159 1 247 400 0,56 607 401 640 000 640 000 0 0 0 0 0 basic+ dividend 1 328 688 1,159 1 539 760 0,56 749 760 790 000 640 000 150 000 75 000 75 000 75 000 0 basic+ union 1 189 275 1,159 1 378 200 0,62 738 200 640 000 640 000 0 0 0 0 0 + dividend + union 1 470 093 1,159 1 701 216 0,62 911 216 790 000 640 000 150 000 75 000 75 000 75 000 0 Bill French, line-by-line BEP basic Sales volume at aggregated BEP 1 076 406 basic+ union 1 189 275 BEP A (in units) BEP B (in units) BEP C (in units) 170 000/0,42= 404 762 275 000/0,88 = 314 286 195 000/0,55 = 354 545 170 000/0,30 = 576 271 275 000 / 0,81 = 338 462 195 000/0,53 = 371 429 Bill French, aggregated CVP calculations basic Sales volume Unit sales price (+) Sales revenue Unit var. cost (-) Total VC (=) Contribution margin (-) Fixed cost (=) Operating profit (-) Taxes (=) Net Profit after taxes Dividends (=) Net Profit 1 160 500 1,159 1 344 854 0,56 654 854 690 000 640 000 50 000 25 000 25 000 0 25 000 + dividend 1 412 783 1,159 1 637 214 0,56 797 213 840 000 640 000 200 000 100 000 100 000 75 000 25 000 + union 1 282 188 1,159 1 485 873 0,62 795 872 690 000 640 000 50 000 25 000 25 000 0 25 000...
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...BILL FRENCH I. BACKGROUND AND ISSUES Bill French was staff accountant of Duo-Products Corporation. He was reporting to Wes Davidson and had been doing routine types of analytical work. In an informal manager’s meeting, Davidson invited Bill French to attend. French choose to present break-even data to determine the level at which the company must operate in order to break-even. During the meeting, French was challenged and questioned because his presentation failed to consider some aspects of the company’s operation such plans for expansion in sales and production, the product mix and prices on individual product basis since he was only using “averaging”. This is because of his following assumption: • He has assumed that there is just one breakeven point for the firm (by taking the average of the 3 products). • He has also assumed that the sales mix will remain constant. Total revenue and total expenses behave in a linear manner over the relevant range. • Since the capacity is being expanded to increase production of Product C, it could be assumed that this increase should be allocated to this product. Production of Product A is to be scaled down, but its level of fixed costs has been assumed to be unchanged He also failed to consider the interest of other stakeholders such as taxes, dividends, expected union demands and the question on product emphasis. French is requested to prepare a thorough break-even analysis taking into account all the series of assumptions...
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...a depression hit, and he discovered that not only were his clerks ignoring much needed paperwork, they were also stealing money hand over fist. He took the time to examine the books in detail, noting inaccuracies and becoming aware of the importance of calculating overhead into the costs of his pottery. He hired a new clerk and began weekly accounting reviews, and according to historians, the concepts of “economies of scale” and “sunk costs” were discovered. He changed the prices of his pottery to reflect the influence of demand, creating both a high-end line and a lower quality mass market line. Wedgewood’s company was one of the few to survive that depression. It took another fifty years or so for the occupation now known as “accountants” to come into vogue. In the mid-19th century, a group of clerks in London advertised their services as “accomptants.” As business regulations increased along with taxes, the need for...
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...Bill French Case 16-3 Introduction French, a staff accountant who was hired six months was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Then, he was requested permission to make a presentation of some break-even data. The Duo-Products Corporation had not been making use of this type of analysis in its planning or review procedures. What French had done was to determine the level at which the company must operate in order to break even. He uses information given in past accounting records to construct his break even analysis without take into consideration with other department about the company operation. As per Bill French: “The company must be able at least to sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. Further, it will not make a profit unless it covers the fixed cost as well. The level of operation at which total costs are just covered is the break-even volume. This should be the lower limit in all our planning.” Question 1 What are the assumptions implicit in Bill French’s determination of his company’s break-even point? 1. There was only one break-even point for the firm whether product by product or in total (he taking average of 3 products). Refer to the table below. | A | B | C | Aggregate | Sales at full capacity (units) | | | | 2,000,000 | Sales Volume (units) | 600 000 | 400 000 | 500 000 | 1 500 000...
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...be a good fit for the company and if that company will satisfy their personal values and beliefs. For me, as a future accountant in the professional public firm, some of the most important characteristics are ethical values and their practices within the company. I am very interested in learning how ethical values promoted by professional accountants’ impact organizational culture, how organizational culture affects accountants’ ethical judgments and how espoused organizational cultures influence public accounting firms. To analyze and look deeper into these issues, I evaluated and studied the following articles: Daniela, Ţogoe Greti, Mateş Dorel, and Mănescu Dragotoiu Mileva Valentina. Impact of Ethical Values Promoted by Professional Accountants on the Organizational Culture. Annals of the University Of Oradea, Economic Science Series 22.1 (2013): 1280-1285. Douglas, Patricia Casey, Ronald A. Davidson, and Bill N. Schwartz. The Effect of Organizational Culture and Ethical Orientation on Accountants' Ethical Judgments. Journal of Business Ethics 34.2 (2001): 101-121. Holmes, Scott, and Stephen Marsden. An Exploration of the Espoused Organizational Cultures of Public Accounting Firms. Accounting Horizons 10.3 (1996): 26-53. Ethical values and organizational culture In the article "Impact of Ethical Values Promoted by Professional Accountants on the Organizational Culture" authors Ţogoe Greti Daniela, Mateş Dorel, and Mănescu Dragotoiu Mileva Valentina look and...
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...1. P. Kemezis and W Clasgall, 'ATexas Wildcatter Cashes in on French Oil," Busrhess W-eek,'tsllay' ' 1985, 106-10i. 2. The dominant companies in the oil and gas industry include such firms as ExxonMobil and ConocoPhillips. These firms are often referred to as the "majors' or simply as "Big Oil." 207 208 !': $1 iil {r i. $- :..1 sEcTtoNTHREE INTERNALCournollssuas of oil and gas exploration by employing a rough-andtumble business strategy. Lee recognized that the large domestic oil firms in the U.S. had already identified the prime drilling sites in this country. So, Lee decided that Triton should focus its exploration efforts in other oil-producing countries, particularly in regions of those countries largely overlooked by "Big Oil." During Lee's tenure with Triton, the company launched exploration ventures in Argentina, Australia, Canada, Colombia, France, Indonesia, Malaysia, New Zealand, and Thailand. In the early 1970s, Triton discovered a large oil and gas field in the Gulf of Thailand. Recurring disagreements and confrontations with the Thai government stymied Triton from developing that field for more than l0 years. Lee's experience with the Thai government taught him an important lesson: If Triton's exploration ventures *.re io be successful in foreign countries, the company had to foster good relationships with key governmental officials in those countries. Lee created Triton Indonesia, Inc., a wholly owned subsidiary...
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...PONTIFICIA UNIVERSIDAD CATÓLICA DE CHILE ESCUELA DE ADMINISTRACIÓN Contabilidad II (EAA - 111B) Tarea N° 4 - Caso “Bill French, Accountant” Semestre: 1/11 Puntaje total: 60 puntos Profesores: Marta Del Sante A. Julio Gálvez P. Cristián Ramírez H. INSTRUCCIONES PARA RESPONDER 1. La solución al caso debe ser trabajada en pares. Cada integrante deberá entregar una copia de la solución, donde ambas tareas (las de los dos integrantes) deberán estar unidas. Se elegirá una de ellas al azar para ser corregida. La fecha de entrega límite de la tarea será el día miércoles 1 de junio a las 13:00 hrs. La tarea debe entregarse a las siguientes secretarias (no a los Ayudantes salvo indicación expresa del Profesor): i. Alumnos del profesor Ramírez: entregar a Sra. María Isabel Ramírez (secretaria ubicada en el 3° piso de la Escuela de Administración, en el sector que mira hacia el norte). Alumnos de los profesores Del Sante y Gálvez: entregar a Sra. María Cristina Sáez (secretaria ubicada en el 3° piso de la Escuela de Administración, en el sector que mira hacia el sur). 2. 3. ii. 4. La tarea debe entregarse en forma manuscrita, indicando claramente en la parte superior de la primera página el nombre y apellidos del alumno y el profesor con el cual está cursando el ramo. Si alguno de estos datos no viene debidamente señalado, se le restará un punto a su nota final. No se aceptarán tareas enviadas por medios magnéticos (archivos, CD, mp3, mp4, etc.) ni tareas escritas en computador...
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