Special Order Results
I think taking the special order, if we have excess capacity to do so, would be a positive
choice. It would add a $13.25 per burger addition to our operating income if we went with the
variable cost structure and a $30.03 increase per burger using the fixed cost structure8. I think
that if this was a recurring order, I strongly suggest using the fixed cost structure since the fixed
cost are taken care of already regardless of the special order and will only rise if it is out of the
relevant production range. This can be seen by the higher contribution margin using the fixed
cost structure. I would suggest avoiding the special order under most circumstances if there is no
excess capacity because the company would lose $40.59 per burger using the variable structure
or $45 if they used the fixed cost structure9.Under a recurring special order, it would make more
sense to take the order without excess capacity since it is a guaranteed revenue stream which
would lessen outside risks. When considering the special order, I think it’s important to consider
that the burger would be marketed to people who are at the event, so it can cause word-of-mouth…
Concepts of CVP (Cost Behaviour Analysis?)
Contribution margin (CM) is a cost accounting concept that allows a company to determine the profitability of individual products (Investopedia, 2015). In short, it is equivalent to the revenue less the total variable cost (Horngren, Datar, & Rajan). The CM per unit measures the amount of each unit sold contributes to cover fixed costs and increasing profit and also considers what happens when sales and production increase by one…
explores important relationships between costs, volume or activity levels, and profit.
Sheryl asked Thomas to provide her with Bridgestone’s annual budgetary income statement in a contribution margin format. She explained that this format is the basic foundation for CVP analysis since it presents revenues and expenses based on their variable or fixed behavior in relation to service activity (namely, volume of services). Sheryl’s understanding of Bridgestone’s operating environment and the…
running large amounts of product for the larger customers with no down-time for a changeover. See the tables below for keeping or dropping a smaller customer.
Keep All Customers (Option 1)
Haven Foodliner Hy-Vee Walmart Total
Sales Revenue $150,000 $800,000 $900,000 $1,850,000
Variable Cost $70,000 $400,000 $450,000 $930,000
Contribution Margin $80,000 $400,000 $550,000 $920,000
Direct Fixed Cost $50,000 $150,000 $175,000 $375,000
Allocated Fixed Cost $30,000 $50,000 $50,000 $130,000
company. The cost-volume-profit analysis is very helpful for the managers to make product decisions by estimating the expected profitability of the choices because different choices will affect the selling price, variable costs per unit, fixed costs, units sold and operating income. According to Alvis (2016), CVP analysis expands the use of information provided by breakeven analysis. Therefore, this paper is going to address Swill Chocolate Company’s CVP analysis in details which includes the…
1. What are the relevant facts?
• Ryan was recently hired as the Chief Accountant for a relatively small firm
• Sid, the VP of sales, is concerned that the company will not reach their sales quota (200,000 units)
• CEO requires the contribution margin to be $2.00 per unit in order to achieve a pre-tax profit of $85,000
• Due to the variable costs of $4.00 per unit, the selling price must be $6.00
o Competitors are selling similar products
o at lower prices
• Variable costs must decrease in…
The Supreme Court rules that a maximum amount can be contributed to politicians in order to limit political influence from an individual. It also shows through Shaun McCutcheon’s opinion on contributions to Super PACs. McCutcheon believes that from a moral standpoint, being able to give unlimited money to Super PACs is an idea that should be challenged.
2d) Freud would examine how the conscious, preconscious, and unconscious mind interact. For the conscious, Freud would examine what…
cupcake that will blow your taste buds out of your mouth is not only a great snack, but it will provide you with lots of energy to help you get through your day. Although it is not the healthiest food option, it always is the “go-to” option, when you have guests over, have a get-together or just want to surprise the family with something sweet and home-made. R&J not only has the best ingredients, but provides your family with the cheapest and most healthy ingredients. R&J specialize in producing…
In 2003, Opes Prime Stockbroking was founded in a growing margin lending market, where investors borrow money to invest in forms of shares or managed funds, with the security of their existing cash, shares or managed funds. The amount that they are able to borrow depends on their securities on their portfolio, and the Loan to Value Ratio (LVR) and the credit limit depend on the investors’ financial position.
Opes Prime Stockbroking lent with a high LVR up to 95%, meaning that a client could…
contribute and if I don’t contribute today I won’t get to do it until next year
We have to be specific on who we want to help or what we are trying to accomplish. How do we differentiate from others making a similar effort? Why should someone contribute to our organization instead of others? How is our approach or solution unique? Answering these questions should provide contributors with the information they need to support our cause and motivate them to give. Once we have reached our deadline,…