net profit margin. In both measures‚ a high percentage represents a better performance than a low percentage‚ as a business wants to earn high profits. The gross profit margin This measures the gross profit of the business as a proportion of the sales revenue. It is calculated using the following formula: Gross profit margin (% )= Gross Profit x 100 sales For example‚ if a business has gross profit of £4 million and sales revenue of £6 million‚ then the gross profit margin would be:
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BYP6-2 ACC/349 Managerial Analysis: BYP6-2 (a) Compute and interpret the contribution margin ratio under each approach. Current approach: 800‚000 / 2‚000‚000 = 0.4 Automated approach: 1‚600‚000 / 2‚000‚000 = 0.8 (b) Compute the break-even point in sales dollars under each approach. Discuss the implications of your findings. Breakeven Point – Fixed Expenses / Contribution Margin Ratio Current Approach: 200‚000 / .4 = $500‚000 Automated Approach: 600‚000 / .8 = $750
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to survive in the competitive restaurant industry and discouraging economy condition‚ Solomon needs to address the following issues: 1. How to remain profitable so that she can pay off her initial investment of $380‚000. With a low contributed margin (Appendix 2)‚ Solomon will not able to pay off her coming interest on her loans if TUTTI MATTI sale decreases due to the economy downturn. 2. How to maintain strong customer base so that she can eliminate the impact of the economy downturn. The
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meeting certain criteria when it came to their gross margin. They sought to increase their gross margin‚ currently sitting at 18%‚ to that of a more comfortable number of 20%. To combat this issue‚ Classic Knitwear decided to team up with Guardian‚ a producer of odorless repellant protection against bugs‚ and combine their fortes into a line of clothing infused with the bug repellant technology. These new products would hopefully to rise the gross margin to the 20% they were hoping to accomplish. The
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towns and lower overhead during this time. As the economy worsened‚ people began looking for lower prices and moving to smaller towns and suburbs. Today Wal-Mart can generate big sales volume which allows the company to gain profits with low profit margin giving it an advantage over its competitors. 3. Distribution- Wal-Mart operates an unrivaled global network of 146 distribution centers (Troy‚ 2003). Because of this‚ the trickle-down effect happens. Trucks do not have to travel long distances
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CVP Analysis of 2012 A critical aspect that managers must be aware of in order to make sound decisions and precise projections is the understanding of the relationships among costs‚ volume and the company’s profit; otherwise known as CVP analysis. CVP analysis stands for Cost-volume-profit analysis which a form of cost accounting in managerial economics. The five essential concepts underlying CVP analysis include: 1. The behavior of both costs and revenues as being linear throughout the relevant
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Table of Contents Introduction The objective of this report is to provide Mr. Paul Harvey‚ president with the detailed reasoning for the decisions recommended and also to figure out which products are losing money. As the company is operating in an oligopoly and has somewhat medium market share‚ setting our own prices is not an option. The giant Samra announces the prices for the products annually‚ and the other eight companies in the industry follow the price. Problem The organization
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(2) Break-even: $300‚000 Problem 4-20 (2) Break-even: B864‚000 Problem 4-21 (1) Break-even: 12‚500 pairs of shoes; (3) $6‚000 loss Problem 4-22 (3) Net loss: $6‚000; (5a) Break-even: 21‚000 units Problem 4-23 (1b) Break-even: $732‚000; (2b) Margin of safety percentage: 22% Problem 4-24 No check figure Problem 4-25 (1) April net operating income: $21‚800 Problem 4-26 (2)
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Advanced Management Accounting Chapter 1 A management accounting system is an information system that collects operational and financial data‚ processes it‚ stores it‚ and reports it to users (such as workers‚ engineers‚ managers‚ and executives). What the organization tries to deliver to customers is called its value proposition Planning includes activities such as product planning‚ production planning and strategy development. What are the four generic elements of an organization’s
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hours of machine time each month to manufacture its two products. Product X has a contribution margin of $50 per unit‚ and Product Y has a contribution margin of $64 per unit. Product X requires 5 hours of machine time‚ and Product Y requires 8 hours of machine time. If Gamble Company wants to dedicate 80 percent of its available machine time to the product that provides the highest contribution margin per unit of the
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