Competition Bikes Finical Analysis Dan Petersen WGU – JET2 Finical Analysis Task 4 A. 1. To: Vice President This report has been prepared to argue the case that the company’s current costing method should be changed to the activity based costing method. This report will review; the difference between traditional based costing and activity based costing; traditional split and allocations with activity based costing; and discusses the breakeven point for Competition bikes Inc. with
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To: Vice President It would be in Competition Bikes‚ Inc.’s best interest to change from a traditional costing system to an activity-based costing system. In this summary you will find information as to why this change is important as it will highlight the differences between traditional based costing and activity based costing systems. This summary will also give you further findings on Competition Bikes‚ Inc. breakeven point when evaluating the sales units and the sales dollars and also the
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Jet2 Task 4 Competition Bikes management decide to retool and now manufacturing both Titanium and CarbonLite Frames bikes. Competition Bikes was using the Traditional based Costing (TBC) method‚ however the Activity Based Costing (ABC) may give more insight to management and helpful in analyzing the per unit costing of the different types of frames and pinpoint the area of improvement. Also the management wants to know the Breakeven point caused by the potential increase of fixed cost by $5‚000 and
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CAPITAL STRUCTURE: Capital structure is how a company finances its overall operations and growth by using funds from equity or debt (Investopedia‚ 2012). Of course‚ every company must determine its preference on its debt-to-equity ratio and determine which capital structure works best for them. Some approaches to analyzing capital structure are: 1. EBIT – EPS: This analyzes the impact of debt on earnings per share (EPS). Optimizing shareholder’s wealth is the optimum goal and therefore‚ this
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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
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FAQs - JET2 Task 3 Here’s Some Task 3 Advice “Here is the method I used for successfully doing task 3 in 3 days and passing it on the first submission” “**ATTEND THE WEBINAR” A1 “I gave an introduction discussing what capital structure is and how it relates to debt vs. equity financing and what maximizes shareholder return and what the goal of the company is in choosing a capital structure approach. I then made my recommendation discussing all approaches for all years using a table with earnings
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Task 2 – Budgeting A1 - Prepare a summary report in which you do the following: 1. Discuss specific budgetary items raise concern in the budget planning (Spreadsheet Tab: Task 2_Budgets_and_Proformas). Competition Bikes has prepared a budget for year nine of operations. In reviewing the budget presented several technical areas of concern have been noted. For ease of review‚ budgetary issues that raise concerns are presented in a bullet format. · The first issue of concern is in the direct
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A1. During the evaluation of Competition Bike’s budget schedule a few areas of concerns were identified within the budgeting and proformas. The first area of concern within budget was advertising. The advertising was budgeted for $28‚412; they may want to consider increasing their marketing to reach a wider audience to boost sales. In year 6 the advertising was $23‚820‚ then increased year 7 $32‚760‚ and year in 8 decreased to $27‚428. They need to increase their exposure within the bike market
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A1. The highest earnings per common stock share option is the 50% Preferred & 50% Common Stock and it will maximize the shareholder holders return. 12% Bonds 50% Preferred & 50% CS 20% 12% Bonds & CS 40% 12% Bonds & CS 60% 12% Bonds & CS Year 9 0.002 0.027 0.027 0.023 0.017 Year 10 0.009 0.032 0.032 0.028 0.023 Year 11 0.019 0.039 0.038 0.035 0.031 Year 12 0.031 0.048 0.046 0.043 0.04 Year 13 0.042 0.057 0.054 0.052 0.049 Total 0.103 0.203 0.197 0.181 0.16 A1a. During
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Competition Bikes‚ Inc. Budget Summary Report A1. Concerns Upon reviewing the Competition Bikes Inc. (CBI) Budget Schedules and ProFormas for Year 9‚ there are a few concerns that should be analyzed. The first is the forecasted sales in units. The forecast for year 9 is 3‚510 units‚ which is a 3.2% increase over the 3‚400 units sold in year 8. The storyline mentions the economic downturn‚ which has led to a decrease in bike sales. It can take some time to recover sales lost during an economic
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