(TS) =$864‚000 Total Units (TU) = 18‚000 Total variable costs (TVC) = $512‚800 Total Fixed costs (TFC) = $260‚000 Let the number of motors required to be sold to breakeven = Q Then Q = Total Fixed Costs (TFC) / Contribution Margin per unit (CMU) (Equation 1) CMU = Selling price per unit (SPU) – Variable cost per unit (VCU) (Equation 2) SPU = TS/TU = 864‚000/18‚000 = $48 (3) CMU = TVC/TU = 512
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1. Haar Inc. is a merchandising company. Last month the company’s cost of goods sold was $61‚000. The company’s beginning merchandise inventory was $11‚000 and its ending merchandise inventory was $21‚000. What was the total amount of the company’s merchandise purchases for the month? A. $61‚000 B. $51‚000 C. $71‚000 D. $93‚000 Purchases = Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory = $61‚000 + $21‚000 - $11‚000 = $71‚000 2. Gabruk Inc. is a merchandising
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above shows that company’s last one year sales is higher than the average of last five years. The EPS is showing a negative growth. The sales growth of the company in the last one year gives an indication of the better growth of the firm. Profit margins | 2010 | 2009 | 2008 | 2007 | | Gross Profit |
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is caused due to the increase in prices of raw materials‚ resulting in falling profit margins. The problem that the General Manager‚ Pravin Kulkarnii faces is the decision involving the potential price increase of the flagship glucose biscuit brand. Over the past 18 months‚ the manufacturing costs have increased resulting in decreased profit margins to 10%. There is substantial pressure to reinstate the margins back to 15% but it involves analysis of various constraints through logistics and reasoning
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investment venture. The company are well positioned in the market for long-term success but the ratios do let down the attractiveness of investment by their much lower percentage of current assets to current liabilities‚ high gearing and low net profit margins. *Brief Historical Background* Mitchells & Butlers is one of the UK’s largest operators of managed establishments with a strong portfolio of branded and unbranded pubs and restaurants with a mass market appeal. Their popular brands include
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or level of activity 3. per unit variable costs 4. total fixed costs 5. mix of products sold Unit Contribution Margin: p – v Total Contribution Margin: (p - v) *Q Contribution Margin Ratio: (p-v) /p Breakeven Point: The point at which revenues equal total cost‚ and the profit is zero. * Equation Method: p*Q = f + v*Q * Contribution Margin Method Breakeven in Units: Q = f / (p-v) (Fixed expenses / CM per unit) Breakeven in Dollars: Y = p*Q = p*f / (p-v) =
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At the end of this chapter‚ you should be able to: * Describe the differences between the accountant’s and the economist’s model of cost volume profit analysis. * Apply the cost volume profit approaches in the calculation of breakeven point‚ margin of safety‚ target selling price and sales volume. * Construct breakeven‚ contribution and profit volume graph. * Apply cost volume profit analysis in a multi product setting * Identify and explain the assumptions and limitations of cost volume
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present your results): * Current ratio * Acid test ratio * Gearing * Asset turnover ratio * Inventory turnover ratio (if appropriate) * Receivables (debtors’) days * Payables (creditors’) days * Gross profit margin * Net profit margin * Return on capital employed (ROCE) * Dividend per share (if information is available) (40 marks) Ratio | 2010 | 2011 | Current Ratio=Current assetsCurrent liabilities | 2549724283=1.05 | 2157918508=1.17 | Acid Test=Liquid
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FREQUENTLY USED FORMULAS FOR MANAGING OPERATIONS CHAPTER 1—MANAGING REVENUE AND EXPENSE Revenue – Expenses = Profit Revenue – Desired Profit = Ideal Expense Part Whole = Percent Expense Revenue = Expense % Profit Revenue = Profit % Desired Profit Revenue = Desired Profit % Revenue – (Food and Beverage Cost + Labor Cost + Other Expense) = Profit Food and Beverage Cost Revenue = Food and Beverage Cost % Labor Cost Revenue
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COMPANY BACKGROUND: EasyFind manufactures and sells golf balls. The company is conducting a price test to find a better price point. Presently their golf balls sell for $19 per dozen. Their current volume is 5‚470 dozen per month. They are considering reducing their sales price by 20% per dozen. QUESTION 1: What are EasyFind’s total current revenues per month? $19 * 5‚470 = $103‚930 [+/- $3‚118] Total Revenues = Price * Volume QUESTION 2: If EasyFind’s variable costs are $10 per dozen‚ what
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