Bill French Case CASE : BILL FRENCH 1. What are the assumptions implicit in Bill French’s determination of his company’s break-even point? Assumptions Sales volume will be maintained. No planned changes in volume next year Only one‚ aggregate break-even point is utilized in the analysis. Sales mix will remain constant. Linearity will be exhibited by both total revenues and expenses over the relevant range. No capital investments that will increase fixed costs. Constant dividends are paid out to the
Premium Variable cost Costs Management accounting
Bill French Case 1. What are the assumptions implicit in Bill French’s determination of his company’s break-even point? He has assumed that there is only one break-even point for the firm’s three products by taking the average. Labor Union will not affect the product prices no effect on the break-even analysis. Constant dividends were given to stockholders. Production of product “A” will be decreased and the other hand product “C” capacity will be increased. Sales price will be constant.
Premium Marketing Price Profit
1. aWhat are the assumptions implicit in Bill French’s determination of his company’s break-even point? * 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
Premium Variable cost Costs Cost
RESTRICTED INTERNAL USE ONLY BILL FRENCH Bill French picked up the phone and called his boss‚ Wes Davidson‚ controller of DuoProducts 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
Premium Variable cost Costs Fixed cost
1. What are the assumptions implicit in Bill French’s determination of his company’s breakeven point? There are a number of simplifying assumptions made by Bill French in his calculations of the breakeven point of his company‚ Duo – Products Corporation. First‚ he had assumed that the market conditions will remain the same. Second‚ his calculations are based on the last year prices; it does not take into account in any change in prices. Third‚ he also ignores any changes in the fixed and
Premium Variable cost Costs Cost
Bill French case In this case‚ Bill French had gathered information and calculated Break Even Point (BEP) based on few assumptions: 1) Product mix considered constant. 2) Considered that there is just one breakeven point for the company. 3) Fixed and variable cost is assumed to be constant. 4) No inventory. 5) Price assumed to be fixed. Calculation of breakeven point based on assumptions: Table 1: Initial Cost analysis Initial Calculation Aggregates A’ B’ C’ Sales at full capacity (Unit) 2000000
Premium Variable cost Costs Cost
to cover all its costs‚ which are fixed and variable costs. It is measured in either product units or dollars. Bill French‚ Accountant The break even analysis is a very important tool to help any firm in deciding on the best operational volume. It requires three types of costs namely the fixed cost‚ variable cost and selling price (Dayananda‚ et al‚ 2002). As Bill French puts it‚ “the level of operation at which total costs that is‚ variable plus non-variable are just covered is the break
Premium Costs Variable cost Fixed cost
Contents Case Context 1 Case Background 1 Cost-Volume-Profit Analysis 1 Point of View 1 Problem Statement 1 Areas of Consideration 2 The Breakeven Point 2 Implicit Assumptions and Limitations 2 Per Product versus Aggregate Breakeven Point 2 Change in Volume and Fixed Cost 3 Change in Product Mix and Sales Price 3 The Bonus Dividend Plan 3 Union Demand 4 Change in Product Emphasis 4 Recommendations 5 Revised CVP Income Statement 5 Required Levels of Operation 6 Case Context Case Background The case of
Premium Costs Variable cost Management accounting
Module: FC501-2T Student number: T0031051(Roy) T0027147(Vincent) f o s e ag t n a v d a n s r i a d e l d s n t a n s e e d g u ta st n p a l v e d h to y The a g o l no h c e t . n o i t using a c u d e e r g e a t h n g a i sadv in h i D s v s ge a t n a v Ad iated.org/inted/pu blications rchives/5 /a n .c d a ro b .u w w http://w • • • • • CD Video Internet Phone …… Introduction 1575 Advantage (1) Convenience • Easier to search information on the internet (Ranjan‚2012) • Time-saving
Premium Internet Mobile phone Communication
Differentiation Strategy Southwest Other Airlines • Focused on shorter routes within 1 hours of travel • Considered competitor as the car travel and not airlines • Customer experience is considered the best way to win loyalty by “Fun-LUVing” attitude for in-flight entertainment • Culture committee made to guide Southwest in creating the fun loving Aura • Cashless cabin (credit card only for onboard purchase ) • Minimum turnaround time (10 minutes)‚ 1/5th of competitors • Point to point service
Premium Southwest Airlines Airline ATA Airlines