...Summary Report for Competition Bikes Inc., Horizontal Analysis The income statement from year 6 to year 7 sales went up by 33% while product costs, went up only by 31%. Selling expense (33%) and general operating expense (20%) both increased from year 6 to year 7. These increases did not offset the increase in sales, but help contribute to having greater profits in year 7 than the prior year. Net income grows by 313%. The balance sheets also show a growth in assets, with total assets increasing by 2.9%. Liabilities grow slowly, only increasing by 1.2% which is indicator of positive growth for Competition Bikes, Inc. When review the income statement from year 7 to year 8 sales went down by 15 percent, product costs went down by 14 percent and selling expense decreased by 15 percent, however general operating expense increased by 1 percent. The decrease in product cost and selling expense were not low enough to offset the decrease in sales resulting in a decrease in net income by 82%. The balance sheet shows total assets decreasing by -0.1%, but with liabilities also decreasing by -1.9% it offsets the impact of the assets decline. Vertical Analysis The vertical analysis shows the change between items of the balance sheet from year to year. Year 6 current assets represent 24.5 cents out of every asset dollar of the company and total liabilities are 47.5%. In year 7 current assets increased to 31.9 cents. This evidenced by the fact...
Words: 2239 - Pages: 9
...main ways to analysis the financial statements of a business. This analysis provides a year to year look at the financial performance of the business being evaluated. The spreadsheet that is attached provides a horizontal analysis of years 6, 7,and 8 for the balance sheet and income statement for Competitive Bikes and Two Wheel Racing.The horizontal analysis can take into account either the dollar amount of the changes over theyears or the percentage of change for the years. This analysis will consider both items, and willalso be comparing years 6 and 7 and 7 and 8. Year 7 The analysis of years 6 and 7 shows a positive result for Competitive Bikes. RevenueThere was a positive increase in revenue for years 6 and 7. Net sales increased by $1,495,000 between years 6 and 7. This was a 33.3% increase for Competition Bikes. The cost of goodssold increased $1,048,000. This was a 31.8% increase. The fact that net sales increased by33.3%, and cost of goods sold increased by only 31.8% was a significant factor in these twoyears. This was a positive result, because net sales increased more than what the cost of goodssold increased. Competition Bikes found a way to sell more bikes at a lower cost for thecompany. This is why the company had an increase of 37.5% in gross profit.Selling ExpensesTotal selling expenses increased by 33% between years 6 and 7. This was expected, becausemost of the selling expenses are considered variable expenses. Variable expenses are expensesthat increase...
Words: 1844 - Pages: 8
...Introduction: Competition Bikes Inc. has retooled and is making both the CarbonLite and the Titanium frame bikes. The company vice president directed that a cost study be conducted, and an activity-based costing analysis was undertaken in one of the company plants. After the study, a breakeven analysis was completed along with target profit projections. For this task, you will be using the attached “Competition Bikes Inc.” storyline. Task: A. Prepare a summary report to the vice president of the company in which you do the following: 1. Recommend whether the company should change its costing method to activity-based costing. Note: The discussion should include sufficient financial justification for the recommendation made. (Provide an appropriate recommendation, with sufficient support, of whether the company should change its costing method to activity-based costing) 2. Based on an evaluation of cost-volume-profit, do the following: a. Analyze the breakeven point for Competition Bikes Inc. with regard to sales units and sales dollars for both CarbonLite and Titanium bikes. (Provide a plausible analysis, with sufficient support, of the breakeven point for Competition Bikes Inc. with regard to sales units and sales dollars for both CarbonLite and Titanium bikes based on an evaluation of cost-volume-profit.) b. Prepare a summary report that describes the impacts to the breakeven point if company management...
Words: 308 - Pages: 2
...Jorge Felix MBA, Management and Strategy Student ID: 000309831 Mentor: Rose Sklar C 915-497-5423 El Paso, Texas MST Financial Analysis RJET Task 4 To: Mr. Vice President From: Jorge Felix, CBI Analyst RE: Summary report As directed by you, please read below my analysis and recommendations for Competition Bikes Inc. Since the company has retooled and is making both the Carbon Lite and the Titanium frame bikes. I will be analyzing the results of your directed activity-based costing analysis was undertaken in one of the company plants. After the study, a breakeven analysis was completed along with target profit projections. It will be in Company’s best interest to change from a traditional costing system to an activity-based costing system. In this summary report you will find evidence as to why this transformation it’s relevant and important since it will emphasize the differences between traditional costing and activity based costing systems. A1. Costing Method This method is defined as the allocation of manufacturing overhead (indirect manufacturing costs) to products on the basis of a volume metric such as direct labor hours or production machine hours. As manufacturing becomes more sophisticated the manufacturing overhead costs usually increase while the direct labor hours or production machine hours decrease. Hence, the direct labor or machine hours are unlikely to be the root cause of the manufacturing overhead (Accounting Coach, 2012) This costing method is called traditional...
Words: 1404 - Pages: 6
...Mike’s Bikes Paper # 1 Instructions: Complete a five year simulation, and answer the following questions on the actual approach you used for the simulation. You may type your answers directly on this form, but the completed document must be 2-3 pages in length (please do not change the margins). Due November 25, 11:59pm 1. What is your overall strategy (Selling on Price or Value?) A. If selling on low price, what is the implication for decisions you will make on spending (Advertising, PR, Branding, Channel Support, Quality, Efficiency, etc.)? My Overall strategy eventually was to provide a moderately priced product at suggested cost and again and medial quality. After dabbling in the program for a while, I began to somewhat realize how things worked. I noticed through the reports that the Mountain Bike relied mostly on advertising, and PR had a “low” impact on overall sales, so it stated. I began by advertising it heavily in the areas in which the marketing reports stated reached the target audience the most. I completely avoided the PR since it was stated to have little impact on sales for this specific product. I had also avoided Branding at first and wanted to focus more on the when I had multiple products on sale. I began to notice as I went that even though the share price was increasing, my sales and product awareness were lacking, especially in comparison to the competitions sales even though my price was quite lower than theirs. I assume this is due to...
Words: 1804 - Pages: 8
...Competition Bikes Inc. Summary Report 2014 Here is the Horizontal Analysis for years 6 and 7 for Competition Bikes Inc. Income Statement Sales Revenue: Net sales for Competition Bikes Inc. increase from $4,485,000 to $5,980,000, which was an increase of 33.3% for the year. This is a strength for the company since it shows that the demand for Competitions Bike’s product has increase over the year. This figure should also make stockholders very happy since the money the company makes helps determine the stock price. In this case it was a positive increase so it’s stock price should reflect a positive increase as well. Cost of Goods Sold: Cost of Goods Sold (COGS) increased from $3,294,000 to $4,342,000, which was an increase of 31.8% for the year. The increase in COGS is not necessarily a bad thing (strength) for Competition bikes. The COGS should be in tandem with sales revenue since more products sold mean more goods to be produced. In this case the increase of COGS was slightly below the 33.3% increase in sales revenue which shows that some efficiency’s were made in the company. Gross Profits: Gross Profits showed an increase of $447,000 ($1,638,000 - $1,191,000) which is to be expected since net sales increased for the year. With an increase in efficiency (as mentioned in COGS) this figure should be increase as well. Having a increase in Gross Profit also states that Competitions Bike's product is selling very well and/or they have limited availability...
Words: 8250 - Pages: 33
...[pic]RJET Task 1 | | | | | | | |Help on this Page | |Directions | | | |SUBDOMAINS: 326.1 - MANAGING INTERNAL COST & CONTROLLING FINANCES | |326.2 - MANAGING CAPITAL AND FINANCIAL ASSETS | |326.4 - MANAGING ENTERPRISE RISK & CONTINUITY | |329.4 - MANAGING OPERATIONS | | | |Competencies: 326.1.1: Financial Analysis - The graduate analyzes and benchmarks financial statements, evaluates company | |performance, identifies...
Words: 549 - Pages: 3
...JET2 Financial Analysis Task 4 WGU By Kat-Johnson | Studymode.com Competition Bikes Inc. Storyline Managing Capital & Financial Assets 04/12/2014 WGU JET2 Financial Analysis Task 4 - PASSED To: Vice President The following is a summary report to recommend whether Competition Bikes should change its traditional costing method to activity based costing, and an analysis of the breakeven point with regards to sales units and dollars for both CarbonLite and Titanium bikes. It also discusses the impacts to the breakeven point. The cost-volume-profit evaluation and the traditional vs activity based costing method overhead analysis were used for the review and analysis. Traditional Based Costing vs Activity Based Costing Traditional Based Costing Method (TBC). TBC uses one rate, the overall cost of production, to estimate costs based on the revenue production created. Unlike ABC, manufacturing costs in TBC are only assigned to sold merchandises and do not account for nonmanufacturing costs such as administrative costs. This method is general not as accurate as ABC as it does not account for costs specifics to the level of products. For Competition Bikes, the company can see its manufacturing overhead is $239,020 for the Titanium bikes, and $232,380 for the CarbonLite bikes for a total of $471,400 in overhead costs. This means the unit cost for each is $713 for Titanium bikes, and $1359 for the CarbonLite bikes. Activity Based Costing Method (ABC). ABC determines and allocates...
Words: 2129 - Pages: 9
...Competition Bikes, Inc. will be analyzed by several methods: horizontal analysis, vertical analysis, trend analysis, and ratio analysis. The first is horizontal analysis which “ratios or line items in a company's financial statements are reviewed over a certain period of time. “ (Investopedia.com) The period of time in which this report will be basing its findings are solely on its income statements from year six, seven, eight and nine. As shown in the horizontal analysis file, it is easy to see that Competition Bikes, Inc. had an increase of thirty three percent from year six to year seven while in the following two years (eight and nine), the company experienced a fifteen percent decline in net sales. Additionally, in review of the company’s gross profits, there is an increase between the same years of six and seven, while there is s significant decrease in years seven and eight. Although there could be several factors which may have impacted in their decrease from year seven to eight, it very well may have been caused by an increase on overall production costs, lower sales in general, competition or any combination of these factors. The company’s ability to produce a profit and sustain its profitability levels are vital to its success. One way to review this is to take a look at the company’s ability to turn over inventory (operations) otherwise calculating the number of days its assets are in inventory, working through the sales process and payment is received. For Competition...
Words: 3221 - Pages: 13
...Introduction: JET2 Task 2 Summary Report for Budgetary Planning Competition Bikes, Inc. will be reviewed for its various budgets and for its budgetary planning. Budgets are the main planning tool in all businesses that are used by managers to executive management to make decisions for the company. Cash flow is the bloodline of any organization’s operation including operating activities that determine how much cash stays in the organization called revenues and how much is paid out as an expense or liability. Competition Bikes Inc. makes bicycles for professional riders who compete in road races such as triathlons and biathlons. The bikes have an extraordinary success rate and the product consistently finishes in the winners bracket approximately sixty percent of the time. However, due to the recent economic situation Competition Bikes, Inc. has experience a recent decline of approximately 15 percent in its bicycle sales which the trend expecting to continue for the next thirty six months. This review will provide an analysis and provide recommendation for improving budget planning for the company in a summary report Task: Note: submit a copy of your Excel workbook when submitting your JET2 Task 2 work. . A. Prepare a summary report in which you do the following: 1. Discussion of budgetary areas that raise concern in the budget planning. One of the biggest issues when creating budgets is that there is no absolute way of knowing what next year...
Words: 2261 - Pages: 10
...RJET Task 1 A. Prepare a summary report in which you do the following: 1. Evaluate the company’s operational strengths and weaknesses based on the following: a. Horizontal analysis results Horizontal analysis is to determine dollar and percentage changes by comparing financial statements. (Investopedia.com, 2011) Between years 6 and 7, Competition Bike Inc.’s net sales increased 33.3% at $1,495,000. Between years 7 and 8, net sales of the product decreased 15.0% with a loss of $897,000. Gross profits increased 37.5% at $447,000 between years 6 and 7, but decreased 16.3% with a loss of $266,600 between years 7 and 8. This clearly demonstrated the weakness of Competition Bikes that it has not met its goal of sales. The total general and administrative expenses increased 20.4% with $156,440 in years 6 and 7. It also increased 1.2% with $11,004 in years 7 and 8. Regarding the utilities cost, there is 11.1% increase in years 7 and 8 comparing the 3.8% increase in years 6 and 7. It also has a continuous growth at other general and admin expenses at 31.1% and 7.6%. This demonstrates the weakness in expenses control. The company cut advertising expense to response to the declining sales in year 7 and 8. It is a weakness that company is unable to respond properly to the market changes. In addition, there is 16.3% decrease of research and development in years 7 and 8 comparing the 37.5% increase in years 6 and 7. Lack of research and development fund is...
Words: 4615 - Pages: 19
...Competition Bikes. Inc. Canadian Expansion Summary Report This report is designed to provide an overview, analysis and summary on the viability of either merging or acquiring the Canadian Biking Inc. facility. The Canadian market is growing and may be a substantial opportunity for Competition Bikes, Inc. This report will provide a “summary” of the following: · Capital structure options · Capital structure justification · Capital budget areas of concern · Working capital for expansion · Expansion options – merge or acquire As previously reported the Canadian orders for Competition Bikes, Inc. comprise 10% of the company’s business. The Canadian market is continuing to grow and market research indicates a sufficient number of high end bicycle shops would carry the CarbonLite product. Obviously a number of factors need to be considered before making this decision, such as, qualified labor force and cost of labor, tax incentives, transportation cost new facility cost and acceptance of the community. However, a new option became available after Canadian Bikes, Inc. heard about Competition Bikes, Inc. desire to move into the Canadian market. Canadian Bikes, Inc. proposed a number of options to Competition Bikes, Inc. · merger with Canadian Bikes, Inc.; · acquisition with Canadian Bikes, Inc. for $1.485/share; · Licensing of the Titanium technology for $200/unit. Based on this proposal the merger or acquisition of Canadian Bikes, Inc. required a detailed...
Words: 3490 - Pages: 14
...Competition Bikes Budgeting and Variance Analysis Report Western Governor’s University Competition Bikes Budgeting and Variance Analysis Report Competition Bikes, Incorporated (Inc.) makes bicycles for professional and other highly accomplished riders who compete in bike races, biathlons, and triathlons. Approximately sixty percent of all race winners have been victorious using bicycles designed by Competitions Bikes, Inc. This extraordinary success rate is a topic of conversation among racers and has led to exponential success for founder Larry Ferguson who formed the company in 2001 in his garage. Competition Bikes is known for quality products and is leader in the market with the CarbonLite products they provide. These results are transparent in the budgets from the last few years; however, the most recent budget contained several unfavorable variances that may be an indication that some changes are needed. Budget planning, identifying unfavorable variance, and correcting those variances can make or break the financial position of a company. The following is a summary report that discussed budgetary areas that raise concern in budget planning; evaluates the flexible budget and its variance; recommends corrections actions for areas of concern based on the variance analysis; and discusses how the concept of management by exception could be applied to the variances. Budget Planning, Allocation of Resources, and Management Control ...
Words: 2352 - Pages: 10
...Summary Report for Vice President Western Governors University A1. To: Vice President The following summary will provide information as to why Competition Bikes, Inc. should switch its costing method from a traditional costing system to activity based costing. The traditional costing system is used by many corporations and allocates production overhead to the units manufactured. Companies that utilize the traditional costing method typically believe that the volume metric is the factor that drives the manufacturing overhead costs. The traditional costing system does not accurately represent the manufacturing costs that are affiliated with the production of an item. It is designed more so for departmental focus, not process focus and focuses on cost incurred not cause of costs. On the contrary, activity based costing is designed to assign costs to activities. ABC is becoming more widely used since companies are growing more complex and need to allocate increasingly huge indirect costs to the correct area or activity. Simply put, activity-based costing is a process where costs are assigned due to the cause and effect relationship between costs and the activities that drive costs. Traditional costing systems have a tendency to assign indirect costs based on something easy to identify (such as direct labor hours). This method to assigning costs can be very inaccurate, as there is not necessarily a relationship between the costs that are being assigned, and the activity...
Words: 1149 - Pages: 5
...A.1 Throughout this paper, the “Competition Bikes Inc. Storyline” case study will be used to prepare a summary report based on the evaluation of the company’s operations. The objective will be to evaluate the company’s operational strengths and weaknesses based on the following: a. Horizontal analysis results b. Vertical analysis results c. Trend analysis results d. Ratio analysis results As defined by Business Dictionary (2014) Horizontal Analysis is ” Comparative study of a balance sheet or income statement for two or more accounting periods, to compute both total and relative variances for each line item.” Competition Bikes Inc. will be analyzed in each area in regards to years 6, 7, & 8. Analyzing the strengths and weakness of the operations throughout the discussed years will take place throughout the assignment. The Strengths of Competition Bikes Inc. will first be analyzed and discussed. Firstly, Revenue will be analyzed for years 6 & 7, in which there are strengths concerning Net Sales. From year 6 to 7, Net Sales increased by $1,495,000, a 33.3% increase for Competition Bikes Inc. Year 7 was a much stronger year concerning Net Sales for Competition Bikes Inc., compared to year 6. A second strength within the Horizontal Analysis is the Cost of Goods Sold for year 7, compared to the previous year. The COGS increased to $1,048,000, which is a 31.8% increase. This is significant due to the fact that the Net Sales enjoyed a much larger increase compared to the Cost...
Words: 3522 - Pages: 15
