Over the past year the company sold 40,000 skateboards, with the following operating results: Management is anxious to maintain and perhaps even improve its present level of income from the skateboards. Required: * 1. Compute (a) the CM ratio and the break-even point in skateboards, and (b) the degree of operating leverage at last year's level of sales. * 2. Due to an increase in labor rates, the company estimates that variable costs will increase by $3 per skateboard next year.
The author provides three pieces of backing to support each case of evidence that he brought to the table. The author explains how the home buyer’s tax credit is due to expire come May, at this time the market will be hit by a overflow of newly foreclosed homes. He also states that 2.4 million foreclosed homes are estimated to be added to the glut in 2010. This will drive prices down at least 10% and bring the average decline in the country to 40%,
Along with provided data the company has its financial statements for the years range from 2006 to 2008. Evaluation of this data will help to highlight budgetary items that raise concern in the budget planning. Sales budget The company plans to realize 3510 units in 2009, which is 110 units more considering realized units in 2008. In its statement, the company noted that the current economic situation and declining sponsorships are the reason for the decrease in sales and it is expectation of the further decline for the three following years. However, the company doesn’t provide strategy to support its plan to realize more units.
Memo To: Hamilton Milner, President of Scheff Rotary cutting Tools From: Marketing Consultants Date: 1/29/2014 Re: Scheff Rotary cutting Tools Problem Statement As Scheff Rotary Cutting Tools’ appears to be very successful and sales revenue is increasing every year, however their gross margin is decreasing in a constant rate. Recommendation Restructure the sales accounts by discontinuing the direct end user accounts and emphasis only on distributor sales. Implementation Plan Short-Term (0-3 Months) • Evaluate the market over the next five years and determine any changes in demand and customer needs and wants. • Promote the product application experts (sales person) as distributor account manager and market development manager to improve the servicing and to increase revenue. Mid-Term (3-12 Months) • Change from direct sales to distributor sales.
Old Turkey Mash Case: The firm has been writing off all the warehousing and oak barrel costs incurred as they are capitalizing these items as period cost which has a direct impact on their Net income. In the given income statement the cost incurred during the period is written off in the same year. Therefore the cost of production which is still in process of aging is charged against the revenue due to which net profit is decreased. The firm has is now under pressure (result of projected losses in the third year) as they ask the local bank to finance the production expansion which is likely to finance only profitable ventures. The firm should change their accounting style and use product cost model so that the firm only capitalizes the revenues and cost when they sell a unit of bottled old turkey.
With falling lottery revenues that pay for the scholarship, the government will have to boost lottery sales, or they will have to find new ways to pay for the scholarship. The scholarship “would be cut $279 million next year.”(Wermers pg1) The current governor Nathan Deal opposes changes in the current benefit plan, but will not support raising or creating a new tax. The lottery currently
b. Revising the estimated life of equipment from 10 years to 8 years. c. Not writing off obsolete inventory. d. Reducing research and development expenditures. 2. Prophet Corporation has an extraordinary loss of $200,000, an unusual gain of $140,000, and a tax rate of 40%.
Another reason for the slow growth in the late 90’s was the over expansion in the previous years. In this report, we are going to forecast Body Shop´s Financial Statement for the next three years (from 2001) and follow the new implemented strategy of 2001, which are: firstly, to enhance Brand Name & increase investment, secondly, to decrease the cost and make the company more efficient, and finally to reinforce the stakeholder culture. Our forecasting will mainly focus on the first two elements. Basic Assumption This paper forecasts the earnings and financial need of Body Shop over the next three years, by using historical sales information and other accounting ratios. Due to insufficient information, this forecast will mainly focus on relationships between sales and accounting ratio.
• He can see if his investments in new machinery are paying dividends. • And he can also assess the amount of stock that he is carrying in the business. Question 1 (B) The identified Issues within Michael's Chairs profit and loss account lie in a few areas. Purchases are up +35% on last year due to a £170000 spend on high-precision sawing equipment which has increased overall expense. Stock is up by +115% on last year, but a 20% rise in sales due to new machinery speeding up production is expected and planned for.
The President believes “if we do not act swiftly and boldly . . . we could lose millions of jobs next year” (Fouthy and Espo, 2008). The President emphasizes that a quick infusion of funding from the stimulus bill will raise the