1. A calculation of break-even point (in units) for the year ended 2001. For the purposes of simplifying this calculation, you should assume that ONLY direct material and direct labour costs are considered variable with respect to changes in volume. Clearly identify your assumption regarding the sales mix in your calculation and specify why this assumption is important in the context of CVP analysis. Het resultaat in 2001 was negatief, waarbij er 2.709.000 shirts verkocht zijn. Uit bovenstaande analyse blijkt echter dat het break-evenpoint 3.139.787 moet zijn bij de huidige kosten en opbrengstenstructuur. Met betrekking tot de salesmix kan gezegd worden dat deze belangrijk is bij de CPV analyse, doordat de onderneming meerdere …show more content…
accountmaintenance en shipping). Er zou gedacht kunnen worden om de shopklanten niet meer te bedienen daar deze voor de grootste kosten zorgen voor de onderneming. Toch lijkt het mij om de gealloceerde kosten te analyseren en te kijken hoe deze verminder kunnen worden. Om competitief te zijn richting de concurrent dient niet alleen naar de verkoopprijs gekeken te worden, maar ook naar de kostenvoet. Er zijn diverse methodes die bij kunnen dragen aan de beheersing van de kosten voor de onderneming. Echter ben ik van mening dat de onderneming moet kiezen tussen twee varianten, namelijk: • Kaizen Costing. Methode voor het verminderen en beheersen van kosten. Hierdoor is de onderneming continu bezig met het verbeteren van de kostenstructuur tijdens het productieproces, waardoor de efficiency toe neemt (dit heeft in diverse Japanse ondernemingen immers ook al zijn succes bewezen). • Activity Based Management (ABM). Deze methode wordt veelal gebruikt bij de ABC. Er wordt hier voornamelijk gekeken naar overlappende activiteiten die waarde creëren. Er wordt bij deze methode vanuit gegaan dat als de activiteiten goed geleid worden, de kosten op de lange termijn onder controle zullen zijn. Mijn aanbeveling zou zijn om op korte termijn gebruik te maken van de Kaizen Costing methode. De reden hiervoor is dat de CEO van de moedermaatschappij heeft laten
According to, Skills for Business Decisions, “Cost-volume-profit (CVP) analysis examines changes in profits in response to changes in sales volumes, costs, and prices.” (Kimmel P.D. 2009) A company’s profit is the CVP profit equation of Profit = Revenue – Expenses. A Cost-volume-profit (CVP) analysis consists of five basic components that include:
It helps managers a lot in evaluating future courses of action regarding pricing and the introduction of new services. CVP analysis or Breakeven is used to compute the volume level at which total revenues are equal to the total costs. When total costs and total revenues are equal, the organization is said to be “breaking even”. Managers can utilize P&L statements which are used to project profit or net income. P&L statements can be developed to serve decision making purposes. These can be created for any subunit within an organization, whereas income statements are created only for the overall accounting entity. Break even analysis contains important assumptions and is very essential to the managers to determine whether assumed values can be realistically achieved. Managers can perform CVP analysis to plan future levels of operating activity and provide information about:
CCC also needs to verify the quantity of canoes which needs to be sold to ensure that the company is not operating at a loss. CCC may use the sales price per unit and the variable cost per unit to compute the contribution margin; and subsequently, the breakeven quantities. Using the projected sales price and given variable cost, the breakeven analysis for units will be:
The objective of Break-Even Analysis is to establish what will happen to the financial results if a specified level of activity or volume fluctuates. This information is vital to management, as one of the most important variables influencing total sales revenue, total costs and profits is output or volume.
This question gives students an opportunity to exercise their ability to interpret break-even analyses. Key teaching points should include explaining the preparation of a break-even chart, the interpretation of the break-even volume (938,799 hectoliters [HL]), and the comparison of the break-even volume to the current volume (1,173,000 HL). Another key point is that the chart in case Exhibit 5 is relevant only for the current cost structure of the company—if variable costs increase or the plant expansion is approved, the break-even volume will rise. Finally, students should be aided in understanding that “break-even” refers to operating profit, not free cash flow. The typical use of the break-even chart ignores taxes, investments, and the depreciation tax shield.
Businesses – from manufacturing, merchandising and service industries alike – take careful considerations for their costing systems. Setting-up competitive prices in the market can be a result of proper costing methods. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods Zauner Ornaments are currently using and upon conclusion, it will enable us to distinguish the advantages and disadvantages of each costing method.
John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system.
A company's break-even point is the amount of sales or revenues that it must generate in order to equal its expenses. In other words, it is the point at which the company neither makes a profit nor suffers a loss. Calculating the break-even point (through break-even analysis) can provide a simple, yet powerful quantitative tool for managers. In its simplest form, break-even analysis provides insight into whether or not revenue from a product or service has the ability to cover the relevant costs of production of that product or service. Managers can use this information in making a wide range of business decisions, including setting prices, preparing competitive bids, and applying for loans.
INTRODUCTION Businesses – from manufacturing, merchandising and service industries alike – take careful consideration in the analysis of their costing systems in order to be able to set up competitive prices in the market. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods which Zauner Ornaments have used or is currently using and, in conclusion, be able to distinguish the advantages and disadvantages of each costing method. CASE CONTEXT The case seeks to assist Zauner’s comptroller, Yu Chia-yi, in determining the best costing method for their overhead costs. In addition we also aim to
He realized that the company didn’t focused in a product analysis to know where does the organization were creating and losing money. After his financial and capital analysis Ovesen set financial targets like manufacturing cost ratios, return on sales and measurements of returns on capital to the LEGOLAND parks.
The Following involves the analysis of the costing techniques followed by the company along with its Budgeting system. It also involves the Investment appraisal analysis for the given data.
Break Even Point in Sales = (Total Fixed Costs + Target Profit) ÷ Contribution Margin Ratio
Some of the assumptions of CVP as outlined by accountingformanagenment are: selling price is constant regardless of volume change, costs are linear, with multi-products the sales mix is constant, and manufacturing companies inventories do not change (N.D.). Because of the assumptions
This equation is solved for the sales volume in units. c. In the graphical approach, sales revenue and total expenses are graphed. The break-even point occurs at the intersection of the total revenue and total expense lines. 8-2 The term unit contribution margin refers to the contribution that
I eksternanalysen så vi på hvordan de eksterne omgivelsene der Hennes&Mauritz opererer kan skape strategiske muligheter og trusler. Vellykkede strategier er også avhengige av at bedriften har den interne strategiske kapasiteten som kreves for overlevelse og suksess. I denne delen av oppgaven vil vi vurdere om H&M innehar egenskaper som kan gi konkurransefortrinn i bransjen. Dette fordi en bedrift bør kjenne til bakgrunnen for sine konkurransefortrinn for å kunne utnytte disse på best mulig måte. Årsaken til en bedrifts konkurransefortrinn bunner som oftest ut i bedriftens ressurser og bruken av disse. Vi vil først presentere ulike ressurser en bedrift kan inneha som