User Account

All Pages

Prepare a cvp income statement for current operations

Assignment Help Accounting Basics
Reference no: EM131562267

Scenario: Mary Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,000 in fixed costs to the $270,000 in fixed costs currently spent. In addition, Mary is proposing a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Mary's ideas but concerned about the effects these changes will have on the break-even point and the margin of safety.

Complete the following:

  • Compute the current break-even point in units, and compare it to the break-even point in units if Mary's ideas are used.
  • Compute the margin of safety ratio for current operations and after Mary's changes are introduced (Round to nearest full percent).
  • Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Mary's changes are introduced.

Prepare a maximum 700-word informal memo to management addressing Mary's suggested changes.

  • Explain whether Mary's changes should be adopted. Why or why not? Analyze the above information (three bullet points above) and use this information to support your suggestion.

Show your work in Microsoft Word or Excel.

Reference no: EM131562267

Questions Cloud

Write a brief report describing the given study : Write a brief report describing this study and the practical value of the solution. Describe a practical problem or article that uses probability distribution.
What net effect do these entries have on total assets : Yaro Company recorded journal entries for the issuance of common stock for $160,000, What net effect do these entries have on total assets
Create a table or organizational chart : Create a table or organizational chart in which you identify the traits/characteristics of each of the groups below saand discuss the cultural values .
Describe interest rates during the inflationary period : Describe interest rates during the inflationary period. Describe major economic consequences of the inflation. Explain how they were able to control inflation?
Prepare a cvp income statement for current operations : Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Mary's changes are introduced
What is your hypothesis about what the family is doing : What is your hypothesis about what the family is doing or not doing to perpetuate (or fail to resolve) the presenting problem.
Explain the role of moral hazard in recession and recovery : Explain the role of moral hazard in the recession and the recovery. Identify any actions the US failed to take in fighting the 2008 recession.
Explain what is meant by the statement : Explain what is meant by the statement, "Change in one person changes the system." Provide an example of how this can be achieved.
What was the net cash used by investing activities : What was the net cash used by investing activities for the year ended September 27, 2014

Reviews

Write a Review

Accounting Basics Questions & Answers

  Alternative strategies for kudler fine foods

Kudler Fine Foods is a gourmet food shop owned by Kathy Kudler whose sole purpose for opening such a store was driven by her passion for gourmet cooking. Kudler Fine Foods has experienced huge success since its birth in 1998, because of the consum..

  Lido manufactures a and b from a joint process cost 70000

lido manufactures a and b from a joint process cost 70000. five thousand pounds of a can be sold at split-off for 20

  Relationship between the audit firm and the audit client

How is the relationship between the audit firm and the audit client different for: (a) the provision of statutory audit when the auditor reports to the shareholders;

  Estimate of the company net operating income

Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $..

  Construct a time series plot

Compare the three-period moving average forecast with the exponential smoothing forecast using α = 0.3. Which appears to provide the better forecast based on MSE?

  Determine the amount over or under budget

Determine the amount that the South Region's costs were over or under budget.

  Deferred tax expense

The enacted tax rate increased to 30 percent in Year 2 compared to an enacted rate of 20 percent in the prior year. At December 31, Year 2, the company would record a deferred tax expense of:

  Weighted average cost of capital basics

The financial statements of Lioi Steel Fabricators are shown below the actual results for 2010 and the projections for 2011. Free cash flow is expected to grow at a 6% rate after 2011. The weighted average cost of capital is 11%.

  Which of the following has the lowest authoritative status

which of the following has the lowest authoritative status but may be useful in assisting the auditor in applying the

  Statement of retained earnings

Prepare journal entries to record each of these transactions for 2014 Prepare a statement of retained earnings for the year ended dec 31, 2014 Prepare the stockholder' equity section of the company's balance sheet as of Dec 31, 2014

  In the month of april a department had 500 units in the

in the month of april a department had 500 units in the beginning work in process inventory that were 60 complete.

  Receivables are frequently classified as

1. Receivables are frequently classified as: Buehler Company on June 15 sells merchandise on account to Chaz Co. for $1,000, terms 2/10, n/30. On June 20, Chaz Co. returns merchandise worth $300 to Buehler Company. On June 24, payment is received f..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd