Determine crumplers budgeted net profit

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Crumpler is a Melbourne based product designers group that manufacture a range products including bags, backpacks, luggage, laptop bags, camera bags, casual bags, etc. The team has experienced in making unique pattern products for more than 40 years. The company is well known for producing items that contributed in solving everyday carrying problems through the design of functional products. The company emphasises on a creed that reads ‘Built for Purpose & Made to Last'. Crumpler has retail stores located in different places of Australia and engages in selling products online to the wider customer base. The company's accountant, Mr. James Carlton, has just compiled sales forecast in relation to three products: Squid, Proud Stash and Private Zoo. Crumpler has experienced considerable volatility in sales volumes and variable costs of its products over the past years. Mr. Carlton believes that the forecast should be cautiously assessed from a cost-volume-profit perspective. The initial budget data for the year 2017 is as follows.

 

Squid

Proud Stash

Private Zoo

Unit sales

4,500

4,500

6,000

Unit sales price

$64

$78

$125

Variable manufacturing costs per unit

$40

$48

$75

Variable selling cost per unit

$12

$16

$22

For the coming year, Crumpler 's fixed manufacturing overhead is budgeted at $150,000, and the company's fixed selling and administrative costs are forecast to be $120,000. Crumpler has a tax rate of 30 per cent.

Required: (treat each requirement independently, show all computations)

1. Determine Crumpler 's budgeted net profit for the year 2017. (Hint: use contribution margin approach to income statement or variable costing statement).

2. Assuming the sales mix remains as planned, determine how many units of each product Crumpler must sell in order to breakeven in the year 2017.

3. Calculate the following items for Crumpler:

a. the projected safety margin in units for the year 2017.
b. the projected safety margin in sales dollars for the year 2017.

4. After preparing the original estimates, management determined that the variable manufacturing cost of Private Zoo would increase by 25 per cent, and the variable selling cost of Proud Stash could be expected to increase by $3.00 per unit. However, management have decided not to change the selling price of either product. In addition, management have learned that Private Zoo has been perceived as the best value on the market, and they can expect to sell three times as many Private Zoo as each of their other products. Under these circumstances, determine how many units of each product Crumpler would have to sell in order to break even in the year 2017.

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This document provides solution for the case study of a Melbourne based product designer group which is engaged in manufacture of different products. The document contains calculation of budgeted profit, break even point, sales mix and margin of safety. This calculations will assists the management of the company in reviewing profitability of different products and taking appropriate decisions.

Reference no: EM131739134

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In academic work, ideas and words are seen as belonging to the person who first created or wrote them. Plagiarism is when you copy someone else's work and don’t acknowledge the author or the source. Plagiarising someone's work equates to failing to comply with the basic standards of academic integrity. Plagiarism occurs when students do not acknowledge that they have used the ideas and/or work of others in the completion of a task(s) that are submitted as their own for assessment. This includes submitting work and claiming authorship when: • Other people’s work and/or ideas are paraphrased and presented as the student’s own without the appropriate referencing of the source of work/idea that has been used • Other student’s work is copied or partly copied • Other people’s designs, or images are presented as the student’s own work • Phrases or passages are used verbatim without the appropriate quotation marks, and/or without a reference to the original author, and publication details (for a book) or a web page ( for an internet source)

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there are problems to solve this assignment has problems to solve, the problems should be solved as per the format or the methods shown. This assignment is worth 15% for the unit. This assignment is due on the 30th (11:00 pm) – use turnitin via Moodle. This is a group assignment. Team of three (3) students should complete the task. If a student completes the assignment individually and submits the file, 3 marks will be reduced right away for not following the instruction. Only one report must be submitted on Moodle via the turnitin link available under ‘assessments’ on or before the due date for similarity check. Submission via email is neither acceptable nor marked. One hard copy report should be submitted on or before 4:30PM. 30. Please use this document as a cover page for your report and must be signed at the bottom of the page by both team members declaring that the work has not been plagiarized. You MUST rename your file with a ‘student number’ of group members. You need to indicate who completed each requirement and how the task has been assigned.

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