example suppose that you manufacture regular and premium golf carts. The selling price‚ variable costs and manufacturing times are as follows: Regular Premium SALES PRICE $ 8‚000 $ 10‚000 VARIABLE COST 5‚600 6‚500 CONTRIBUTION MARGIN $ 2‚400 $ 3‚500 Assembly hours 20 50 Inspect and Test 5.0 2.5 Your company currently has 10‚000 hours available for assembly and 1‚200 hours for inspection and testing. There
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P 20 Q 2.000 R 40.000 VC 16.000 VCu = 8 FC 20.000 Q1) P/P = +20% P = +20%*20 = +4 The formula to compute Iso-Contribution change in sales volume is the following: Q = -25%*2.000 = -500 The maximum sales loss that the company can incur without hurting profits is of 500 units or -25%. Actual Change in Sales Change in Contribution = Change in Profit (%) (Units) ($) ($) 0‚0% 0 8000 8.000 -10‚0% -200 4800 4.800 -20‚0% -400 1600 1.600 -25
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Telephone to plan‚ control and make decisions on performance of its operations in the area served. Planning would involve a financial budget and the level of profit needed. Control would be the measurement and comparison of actual to estimated budget analysis of management’s performance in controlling expenses and meeting estimated expectations. From this control performance‚ adjustment decisions to budget are made and to processes if necessary. The correct decisions can only be made if a cost-volume-profit
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with Wu. Action Plan 1. To conduct a cost analysis to determine the main cost activities for SDS; this will include fixed cost and variable cost. 2. To conduct a revenue analysis to determine cost per revenue. 3. To construct a detailed Contribution Margin Income Statement for SDS. 4. To present a Break-Even analysis 5. To use What-If analysis to show the impact of increasing and decreasing commercial prices and promotion. 6. To make specific recommendation based on quantitative data to Flores
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This document of STR 581 Week 3 Discussion Questions consists of: DQ 1: What is a Value Chain Analysis? Describe the difference between primary and support activities - and provide examples. DQ 2: What are three ways resources become more valuable? Provide an example of each. DQ 3: How might the value‚ rarity‚ limitability‚ and organization analysis of internal capabilities complement a SWOT analysis? Provide an example. General Questions - General General Questions STR 581
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$550 + $825 + $420 + $275 = $2‚070 Total Variable Cost = $2‚070 x $3‚000 = $6‚210‚000.00 Unit Contribution Margin = Sales – Variable Cost = $4‚350 – $2‚070 = $2‚280 ii. Contribution Margin Ratio = Total Variable Cost Total Sales = $2‚280 x 3‚000 $4‚350 x 3‚000 = 0.524137 iii. Break even volume in units = Total Fixed Cost Unit Contribution Margin = $4‚290‚000 $2‚280 = 1‚881.578 = 1‚882 units iv. Break even in sales dollar =break even
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for Waltham Motors Division to break even? Answer Q1: Breakeven Fixed costs $260‚000.00 = ---------------------------------- = ---------------------- = 13‚326 units number of units Unit contribution margin $19.51 UCM (Unit Contribution margin) = USP (Unit Selling Price) UVC (Unit Variable Costs) = = $48.00 - $28.49 = $19.51 USP = Sales / Units sold = $864‚000.00/18‚000 = $48.00 UVC = Total variable costs / Units produced = $512‚800
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Question 1 a. Based on information provided in the question‚ the bonus for the Jane-HW7 manager for the last quarter of 2013 should be $0. The quarterly bonus is determined by two factors: ROA and amount of profits exceeding profit target. During the last quarter of 2013‚ the actual profit is low‚ which is $5‚278. The average total asset of the location is $200‚000. ROA=5‚278÷200‚000=1=2.639% The number is far less than required ROA of 10%. Furthermore‚ the profits ($5‚278) is not exceeding
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Case 6-2 Birch Paper Company Internal Environment • Medium sized‚ partly integrated paper company • Portion of paperboard output was converted into corrugated boxes by the Thompson Division • Four producing divisions and a timberland division to supply part of company’s pulp requirements • Divisions judge independently on basis of profits and return on investments • Decentralization successful‚ company’s profits and competitive position improved External Environment Customer/Supplier
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Quiz 2 Answers (10 POINTS) Question 1 (2 points) The Hansen Company has 3 product lines of tires - X‚ Y‚ and Z with contribution margins of $3‚ $5‚ and $7 respectively. Management expects a sales mix as follows: 90‚000 units of tire X‚ 60‚000 units of tire Y‚ and 50‚000 tires of Z in September 2009. Hansen’s fixed costs are expected to be $552‚000 for the same month. 1. Determine the breakeven point in units for X‚ Y‚ and Z respectively 2. Determine the operating income at a total sales level
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