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Assume that for the second quarter in row, profits are down at Waterfall division. Division Management budgeted $250,000 in profits for the second quarter but actual results were only $197,000 in profits. The division management insists that the budgets were developed realistically but admits sales were down. The division has been under pressure to improve profitability. Corporate Management has asked you to identify the primary cause of the shortfall â?" revenue or costs?Address the following as you develop your answer to Corporate.
1. How will you approach your analysis of the situation?
2. What variance analysis and / or trends would be helpful to evaluate? What are three possible situations that could be the cause for the shortfall in profits?
3. What actions would you recommend for these three possible situations?
4. What recommendations would you make to management to improve the budget process for next year?
Sure Corporation has gathered the following information after its first year of sales. Net sales were $1,600,000 on 100,000 units; selling expenses $240,000 (40% variable and 60% fixed); direct materials $511,000; direct labor $285,000; administra..
Recognize and explain a project where the top-down budgeting approach would be most appropriate. Detail your rationale for decision and list the advantages for using that approach.
Suppose only the specified paramenters change in cost-volume-profit analysis. If the contribution margin increases by $2 per unit then operating profits will ____.
Mad Dog Enterprises manufactures computer game control devices like joysticks and steering wheels. Following is the list of the costs incurred by Mad Dog in 2009:
Recognize three key learning points with respect to application of concepts like fixed costs, variable costs, contribution margin, breakeven analysis, indifference point, and operating leverage to organization's overall financial performance.
Task is to make a 10-12 powerpoint presentation on topic of costing. Explaining what needs to be done to project profits using the traditional income statement if sales were to increase 20%
uppose the company decides that only 1,400 units can be sold at a price of $5,000 and, therefore, the target cost cannot be reached. The company is considering. dropping the steam feature, which adds $600 of variable cost per unit. With this featu..
Hannon Company has 1,600 pounds of raw materials in its December 31, 2011, ending inventory. Needed production for January and February of 2012 are 4,000 and 5,500 units, respectively.
Provide calculations and reasons to support your answer. b. If Maximus Company has excess machine capacity but a limited amount of labour time available, to which product or products should the excess production capacity be devoted? Provide calculati..
Franklin glass works production budget was based on 200,000 units. Each unit requires two standard hours of labor for completion,. Total overhead was budgeted at $900,000 per year, and fixed rate was estimated to be $3 for each unit.
Explain these objections to the accountant's convention cost-volume-profit model
Prepare budget for Ballarat Furniture Company
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