of Table 1 operations Cost Incurred (USD) Ref of cost given in column: 4 Unit Cost (USD) 1 2 3 4 5 6 A Handling of cartons B Shipping of cartons C Desktop delivery 2000 dly 440000 Para 3(c) 220/ dly D Set up of manual E Enter individual F Validate EDI orders 8000 orders 40000 Para 3(d) G General & Selling in Warehouse by freight 80000 cartons 75000 cartons 16000 orders 150000 lines 600000 Para 3(d) 4160000 Para 3(a) 52/ 450000 Para 3(b) 6/ carton Carton 160000 Para 3(d) order lines of each order (i) (ii) (iii) 10/order 4/line 5 / order Expense USD 42500000 of Annual Sales 200000 Para 3(e) 0.47% of sales 3. Explanation of working out the cost shown in column 5 of table above is given below. (a) Handling of cartons in warehouse:-This has two components. Cost of personnel used in warehouse operations and cost of warehouse excluding personnel expense. (i) Cost of Warehouse excluding personnel is USD 2000000 (ii) Only 90% of warehouse personnel are used for handling of cartons in warehouse.
This is not an improvement given the fact that the DCOH decreased by one full day. This would not be good information for the management or financial teams as the cash flow is decreasing by one day. In addition the quick ratio dropped a few points showing that the organization is becoming less able to pay for the debt it is incurring. Relationship between Revenue Sources and Expenses The revenue sources relationship with the expenses go hand in hand. The net patient revenue increase discussed in the report by the chief financial officer showed with the
The company’s proforma statements did not take into account any external factors such as a retail recession taking place. The amount of money invested in inventory is almost double what was forecasted for the nine-month period. Profit margin was only 10%, which was much lower than the forecasted 15-30%. By October of 1995 it should have been obvious to SureCut Shears that sales were not keeping up with what was forecasted causing inventory to build up. Conclusion: If Fischer wants to be able to repay his loan he needs to be more accurate
It has over the years maintained a market share of approximately 60%. During the past few years, HFP has faced a rapidly changing market for infant foods. The decrease in the birth rate and the new concern about food additives brought about major changes in the infant food business. Finally, the increase of competition in the baby food market made the problem even worse. The company’s sales dropped by 3% last year accompanied by a greater drop in earnings with unused plant and warehouse capacity.
1. Question: (TCO4) In a merchandising business, gross profit is equal to sales revenue minus: Your Answer: Instructor Explanation: Merchandising companies are those that buy products and resell them to the end consumer, so the cost of the product sold is usually their largest cost. Their income statement should start with revenues minus cost of goods sold equals gross profit. Points Received: 5 of 5 Comments: 2. Question: (TCO4) BMX Co. sells item XJ15 for $1,000 per unit, and has a cost of goods sold percentage of 80%.
Cost, Volume, and Profit Formulas There are five components of CVP (cost-volume-profit) analysis; 1. volume or level of activity 2. unit selling prices 3. variable cost per unit 4. total fixed costs 5. sales mix Each component are import to the CVP, volume or level of activity can be explain as sales of a product or the number of units sold. Unit selling prices is the amount the product is sold. An example of this is a department store is selling two ties for $20 dollars, then the unit price of each tie is $10 dollars. The variable cost per unit is how much does it really take to make a product. Such as the tie is selling for ten dollars per unit but it only cost two dollars in materials to make.
Perhaps the most widely discussed criticism of Wal-Mart revolves around their high employee turnover rates and the causes of employee dissatisfaction. Namely, Wal-Mart has been accused of utilizing illegal hiring practices, discrimination, and unlivable wage rates. When questioned regarding whether or not Wal-Mart could increase its employees’ wages by $2 dollars, CEO Michael Duke claimed that it would be simply impossible. In monetary terms, we can look at the facts. Wal-Mart reported profits of nearly $15 billion in 2011.
“It’s also highly profitable. The financial services sector of the S&P 500 represents 20 percent of this index’s market capitalization. These companies are making a lot of money serving you.” So, he theorized, with “trillions of dollars of assets, billions of transactions every year—every day probably—when a small percentage of them is inappropriate, the absolute numbers are still pretty big.” The industry is also highly regulated, so it’s likely that a higher percentage of these bad transactions
The larger expenses coming along with high quality and services render salespeople a disadvantage when talking to their clients for business. The standards of performance (SOP) set for extra compensation seem unrealistic, with 75% of salespeople earning no commission in the first half of 1992, and so conceivably, fail to motivate them. This makes the result control less effective as they failed to evoke the desired behaviors – achieving sales targets. Together with other offers by competitors, this resulted in high turnover rate. Profit Sharing - Result controls may serve well with congruence between employees’ and company’s objectives, but employees take for granted the law-required 10% profit sharing of the company’s income and so their motivational effect seems little.
However, the SPH program put a lot of pressure on store managers and sales. In 2010, a large group of the R&R associates sued it for “working off the clock”. This lawsuit might cause reputation damage, and the settlement is up to $200 million. In 2008-2009 before the case, there was an economic recession. The whole luxury goods industry in the U.S. dropped over 14%, and R&R revenues declined 10%.