Thesis Essay

1094 Words Dec 30th, 2012 5 Pages
Report

To: The Board of Directors
From:
Date:
Subject: Draft budget for 2013/14 and alternative strategies
This is with reference to the board meeting held on 10th of October 2012, I have evaluated the draft budget and following four strategies which are under your consideration to enhance profitability of Sarika Ltd. (the Company) to meet its 20% return on capital. * Paul Burns's Proposal (Shut down of Product Z and sale of related machinery for £5k) * Bob Berry's Proposal (Reduction in sale price and variable material cost of Product Z by £1 and increasing its sale demand by 25%) * Ben Kates' Proposal (Overall increase in sales by10% without any other change) * Arthur Mitchell's Proposal ( Reduction in
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| £k | £k | £k | £k | | £k | £k | £k | £k | | £k | £k | £k | £k | | £k | £k | £k | £k | | | | | | | | | | | | | | | | | | | | | | | | | | Sales | 1,500 | 2,000 | 1,200 | 4,700 | | 1,500 | 2,000 | 0 | 3,500 | | 1,500 | 2,000 | 1,350 | 4,850 | | 1,650 | 2,200 | 1,320 | 5,170 | | 1,500 | 2,000 | 1,200 | 4,700 | Less Variable Cost: | | | | | | | | | | | | | | | | | | | | | | | | | Materials | 300 | 400 | 480 | 1,180 | | 300 | 400 | 0 | 700 | | 300 | 400 | 450 | 1,150 | | 330 | 440 | 528 | 1,298 | | 300 | 400 | 390 | 1,090 | Labour | 600 | 640 | 660 | 1,900 | | 600 | 640 | 0 | 1,240 | | 600 | 640 | 825 | 2,065 | | 660 | 704 | 726 | 2,090 | | 600 | 640 | 660 | 1,900 | Overheads | 100 | 160 | 180 | 440 | | 100 | 160 | 0 | 260 | | 100 | 160 | 225 | 485 | | 110 | 176 | 198 | 484 | | 100 | 160 | 198 | 458 | Total Variable cost | 1,000 | 1,200 | 1,320 | 3,520 | | 1,000 | 1,200 | 0 | 2,200 | | 1,000 | 1,200 | 1,500 | 3,700 | | 1,100 | 1,320 | 1,452 | 3,872 | | 1,000 | 1,200 | 1,248 | 3,448 | | | | | | | | | | | | | | | | | | | | | | | | | | Contribution | 500 | 800 | (120) | 1,180 | | 500 | 800 | 0 | 1,300 | | 500 | 800 | (150) | 1,150 | | 550 | 880 | (132) | 1,298 | | 500 | 800 | (48) | 1,252 | | | | | | | | | | | | | | | | | | | |

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