Excel Assignment #2 Preparing a Contribution Margin Income Statement and Operating Leverage Summer 2013 1. Assume that a company is budgeting to sell 2‚500 units of a product at a selling price per unit of $32. The variable cost per unit is $26 and total fixed costs are $5‚000. REQUIRED Prepare a contribution margin income statement and calculate operating leverage. 2. Suppose the company is unsure exactly how many units they will sell. As such‚ their marketing department has provided
Premium Variable cost Management accounting Costs
categorize retailers are the Census Bureau‚ Number of Outlets‚ Margin versus Turnover‚ Location and Size. The number of outlets include chain stores‚ the standard stock list‚ the optimal stock list‚ channel captain‚ and private label branding. Margin versus turnover included gross margin percentage‚ gross margin‚ operating expenses‚ inventory turnover‚ high-performance retailers‚ low margin/low turnover‚ low margin/high turnover‚ high margin/low turnover‚ and high
Premium Retailing Marketing Shopping mall
Before going to more detail of the recommended option‚ I would like to emphasis on the importance of CVP analysis. As CVP is a ‘systematic method of examining the relationship between changes in activity and changes in total revenue‚ expenses and net profit’ (Drury‚ 2000)‚ it is a very useful tool for managers to consider cost structure and price setting. When used in computer applications the method helps managers to make decisions based on the results by varying different variables such as selling
Premium Costs Variable cost Management accounting
Cost‚ Volume‚ and Profit Cost-Volume-Profit (CVP) analysis is a managerial accounting tool that expresses the simplified relationship between cost‚ volume‚ and profit (or loss). CVP analysis is based on several factors and assumptions and uses a formula to express the relationship by equation or graphically and can be used with great effect by managers who understand the limitations of the analysis. Cost-Volume-Profit (CVP) analysis is a managerial accounting tool that expresses the simplified
Premium Variable cost Costs Management accounting
Section (A) Q: How high do the maintenance margin levels for oil and gold have to be set so that there is a 1% chance that an investor with a balance slightly above the maintenance margin level on a particular day has a negative balance 2 days later? How high do they have to be for a 0.1% chance? Assume daily price changes are normally distributed with mean zero. Explain why the exchange might be interested in this calculation. Answer: Required Maintenance margin level for crude: Based on the calculation
Premium Futures contract Short Margin
explain why it is more beneficial for the company to use segmented hurdles rates rather than the corporate hurdle rate currently being used. We will then calculate a new hurdle rate and the economic profit for each division. Then‚ we will explain how capital restructuring can increase our profits for each segment. Lastly‚ we will address the concerns with the company’s recent performance and the future direction of the company. Industry Comparable Analysis Prior to any action
Premium Profit Weighted average cost of capital
PROFIT MAXIMIZATION: REALITY OR A THEORETICAL OBJECTIVE? Research Compiled for The Paper Store‚ Inc. by Amy Sorter 3/2009 For More Information on This Paper‚ Please Visit www.paperwriters.com/aftersale.htm Introduction Though many people equate economics with finance and accounting‚ it ’s actually a social science‚ a study of behavior and how rational people behave when it comes to allocation of resources. Within the study of that social science are many theories in which economists attempt
Premium Economics Profit maximization Pricing
Investment Analysis & Portfolio Management AD 717 OL Margin Purchase / Short Sale Exercise Homework Exercise 2 For simplicity in this exercise‚ ignore any interest costs‚ brokerage fees‚ etc. associated with the transactions Margin Purchase General Widgets shares are currently priced at $20. Janice believes that the price will increase over the next few months Initial Margin Requirement is 50%. Janice has $25000 to invest A. Direct Purchase 1. How many shares of GW could she purchase directly
Premium Margin Short Leverage
accounting profit figure is simply a measure of the true profit of an organisation.” Discuss. In order to assess whether the accounting profit is a measure of the true profit it must first be shown that there is such a thing as true profit. If we decide there is‚ we then need to know what it is exactly‚ in order to assess the extent to which the accounting profit reflects this true profit figure. Before studying this module I believed that the true profit was essentially the accounting profit calculated
Premium Accountancy Object Ontology
behavior and cost-volume-profit analysis are used by managers. 2 Questions Addressed by CVP Analysis How much must I sell to earn my desired income? How will income be affected if I reduce selling prices to increase sales volume? What will happen to profitability if I expand capacity? 3 Cost-Profit-Volume Analysis What is cost-volume-profit analysis? It is the study of the effects of output volume on revenue (sales)‚ expenses (costs)‚ and net income (net profit). 4 Variable Costs
Premium Variable cost Costs Contribution margin