Implications of a 20% “Price Cut” Current Income Statement Income Statement after Price Cut Revenue** 100 80 Variable costs 65 65 Contribution 35 (35%) 15 (18.75%) ** All numbers indexed to 100 for revenue before the price cut. Required volume increase to B/E = X/(CM-X) x 100 In J.C. case, required volume increase = -18.93% 20/(18.75-20) = -18.66%
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can evaluate the financial condition of a firm by reviewing the Balance Sheet. The balance sheet is a snapshot of the business at a specific date that showcase the company assets, liabilities and owner’s equity. 5. How can you determine the contribution margin from an Income Statement? Perform a breakeven analysis. This give information for the decision making purposes. 6. How is a horizontal and vertical analysis calculated? Horizontal Analysis – 1. Compute the dollar amount of change in
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1. List and briefly describe the advantages and disadvantages inherent to the food truck business model and as compared to traditional restaurants. Food trucks have exploded into mainstream American cuisine. Once thought of as a cheap meal available at odd times of the night, street food has become a vehicle for chefs on the rise to make their mark on the food industry. Operating a food truck may seem like an easy task, but it can turn out to be a tremendous undertaking and risky financial venture
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Foreign Exchange Rates Contribution Analysis 1. Since the NZD price stayed the same but the exchange rate went down the Price in USD must increase to $108.70. The formula is: NZD price/exchange rate =125/1.15= $108.70 Since the US$ went up, the variable cost went up because the variable cost equals the old variable cost of $70 plus the new Us price minus the old: = 70+(108.70-100) = 78.70 Since $108.70-$78.70=$30 then there is no gain or loss to total contribution margin. 2. There will be
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Bremen Electronics Company Background Bremen Electronics is a German company that, in 1993, started a subsidiary in the United States called Bremen Electronics USA. Members of the subsidiary’s management team include Herman Klein, President and Marlene Baer, Controller. The initial purpose of this subsidiary is to market two products that were previously marketed in Europe successfully. Bremen Electronics USA began developing a strategy to expand their operations to US markets to meet a
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Financial Analysis Task 4 A1. Costing Method In order for a company to succeed and be successful, it is very important for the company to understand the difference between profit and cost of goods. There are costing tools that can help a business figure out what the cost of product is during the manufacturing process. These tools are beneficial for a company to figure out how much profit can be made. These tools take the cost of manufacturing the unit and subtract it from the sale price of
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INN-ROOM SAFE Managing Accounts Receivable Introduction Managing Accounts Receivable… Background and Problem presented Mass media news programs have made travelers aware, via hidden video cameras, of how common it tis for hotel employees and outsiders posing as hotel guests to gain access to your room and steal your valuables right off the night stand. Of course, by the time you find out something is missing there is no way to figure out who did it. And housekeeping never seems to
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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
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Costing Alternative Choices Summary When making a decision between one course of action or the other, it is beneficial to determine which will option will either minimize costs or maximize gains. In the business world, managers make these decisions based on evaluating the effect of the differential costs – the difference between the two options. From data generated from a firm’s cost-accounting system, managers can apply the rules of cost behavior to determine which cost factors are relevant
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New product Recomendation ABC Company is trying to increase sales from 1.2 million to 3 million within a 3 year time frame which is a very aggressive move to make since that goal of 3 million in sales is more than twice what the company is currently brining in. The company will need to review several factors to determine if this type of an increase is even possible to make by adding an additional product of making cedar doll houses to try to supplement the income. There are several factors that
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