Bob has been performing routine types of accounting work, but he would like to become more involved in cost control and in analyses to help the managers make decisions. Recently, he performed a cost-volume-profit analysis of the company’s three products, as shown below. The analysis was based on data from last year’s accounting records. Prior Year Data Aggregate Motor 15 Motor 10 Motor 5 Sales at capacity (units) 300,000 Actual volume (units) 250,000 120,000 80,000 50,000 Price per unit
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Variable costs and the Contribution margin associated with Item 345. Variable costs: “Variable costs are costs that vary with the volume of activity”2 and they are: direct labor, Materials, Material spoilage & direct department expenses. Fixed costs: “Fixed costs are those that are independent of the level of activity”3 and they are: indirect department expense, Selling and Administrative expense, and General overhead. Changing the price will alter the unit contribution margin, which is the
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Table of Contents Executive Summary 2 Introduction 3 Issues 3 Budgeting 3 Analysis 3 Sales 3 Recommendations 4 Market Trends 4 Cutting Cost 4 Appendix 5 Budgeting 5 Actual Sales Numbers 5 Memo 6 Executive Summary Marlin Company has been in operation for only a few months. As a whole sale distributor that sells products at a cheaper price than stores it as an advantage when coming to bottom line pricing. Currently the company only sells three products which are; sinks
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i thanksmate-ga, I have completed the analysis and discussion of the question you have posed. The analysis was done in Excel, but I have brought everything into text format including a description of all the variables used etc. Preliminary Definitions of Variables and Constraints: x1d – length of fabric 1 produced on dobbie looms x2d – length of fabric 2 produced on dobbie looms x3d – length of fabric 3 produced on dobbie looms x4d – length of fabric 4 produced on dobbie looms x5d
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New project analysis You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and installation costs would add another $12,500.The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The applicable depreciation rates are 33, 45, 15, and 7 percent as discussed in Appendix 12A. The machine would require a $5,500 increase in working capital(increased inventory less increased accounts payable). There would be no effect
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Name _______________ (Please include your name in the file.) I. Classifications (30 points total) Part A: Classifications (2 points each – 22 points total) Determine the classification for each cost item based on 2 different schemes. First, determine cost behavior: whether the cost is variable or fixed (relative to the number of units produced); check the appropriate space. Then, determine whether the cost is a product or a period cost; check
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retained or discontinued are irrelevant. 13-8 Not necessarily. An apparent loss may be the result of allocated common costs or of sunk costs that cannot be avoided if the product line is dropped. A product line should be discontinued only if the contribution margin that will be lost as a result of dropping the line is less than the fixed costs that can be avoided. Even in that situation there may be arguments in favor of retaining the product line if its presence promotes the sale of
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Running head: JET2 TASK 2 1 JET2 Task 2 Budgeting Bonnie Wilson Western Governors University JET2 TASK 2 A.1. Operational Strengths and Weaknesses A.1. Budget Concerns 2 Revenue from sales is budgeted too high. In year 8 Competition Bikes experienced a 15% decline in sales revenue, and yet for year 9, they have budgeted for a 3.2% increase. This is likely to be an overly optimistic projection and relies heavily on economic factors outside of the company’s control. Inaccuracy in this
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Break-even Sales Calculations (thousands of dollars) 2003 2004 2006 Sales $8,583 $8,102 $10,711 Less variable costs: Cost of goods sold 4,326 4,132 5,570 Commissions 429 405 536 Total variable costs 4,755 4,537 6,106 Contribution margin $3,828 $3,565 $4,605 Contribution margin ratio 0.4460 0.4400 0.4299 Less fixed costs Salaries 2,021 2,081 3,215 Advertising 254 250 257 Administrative expenses 418 425 435 Rent 420 420 840 Depreciation 84 84 142 Miscellaneous expenses 53 93 122 Total
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been reclassified as variable selling costs on page 33? A. The income statement shown on page 33 exclusively shows the contribution margin. This format is used for internal company analysis. Benetton has chosen to show it as a part of annual report. The variable costs (Distribution and Transport costs, Sales commission) are clubbed together. This format is called the contribution format. The income statement on page 50 shows the variable costs and fixed costs more clearly. It has broken down the
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