Reference no: EM132315552
Assignment: Purpose of Assignment
The Case Study focuses on CVP (Cost-Volume-Profit), break-even, and margin of safety analyses which allows students to experience working through a business scenario and applying these tools in managerial decision making.
Assignment Steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC)
Tutorial help on Excel and Word functions can be found on the Microsoft Office website. There are also additional tutorials via the web offering support for Office products.
Scenario: Mary Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,000 in fixed costs to the $270,000 in fixed costs currently spent. In addition, Mary is proposing a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Mary's ideas but concerned about the effects these changes will have on the break-even point and the margin of safety.
Complete the following:
• Compute the current break-even point in units, and compare it to the break-even point in units if Mary's ideas are used.
• Compute the margin of safety ratio for current operations and after Mary's changes are introduced (Round to nearest full percent).
• Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Mary's changes are introduced.
Prepare a maximum 700-word informal memo to management addressing Mary's suggested changes.
• Explain whether Mary's changes should be adopted. Why or why not? Analyze the above information (three bullet points above) and use this information to support your suggestion.
Show your work in Microsoft Word or Excel.
Complete calculations/computations using Microsoft Word or Excel.
|
What do you think of huntington thesis
: What do you think of Huntington's thesis? Do you agree with his points? Do you think that studying philosophy will help you understand this new geo-political.
|
|
What is the net present value of making the part instead
: Equipment would have to be purchased for $30,000 and will last for 7 years, at which time it will have a disposal value of $7,000.
|
|
What is net present value of replacing current equipment
: X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment.
|
|
Story contributes to conflcit and its resolution in teardown
: Write a paragraph in which you explain how the setting of the story contributes to the conflcit and its resolution in ?Teardown? .
|
|
Compute the margin of safety ratio for current operations
: Compute the margin of safety ratio for current operations and after Mary's changes are introduced (Round to nearest full percent).
|
|
Discuss the margin of safety and incremental analysis
: The case study focuses on break-even, margin of safety, and incremental analysis and allows students to experience working through a business scenario to apply.
|
|
Develop from the beginning a web site about yourself
: ITAP1004 - Website Development - Victorian Institute of Technology - develop from the beginning a web site about yourself with regard to accommodation
|
|
What is 20x2 depreciation expense for the printer
: On March 20, 20X1, DepCo purchases for $9,000 a printer that it expects to last for 5 years and to have a residual value of $2,000.
|
|
What are two factors used to evaluate reported information
: Which of the following threats should we prioritize the highest when managing risk? What are the two factors used to evaluate reported information?
|