cost volume profit analysis 38

Relax! Stop worrying about deadlines and let our professional writers help you. Hire an essay writer helper and receive a professional assignment before your deadline. We provide writing services for all types of academic assignments.


Order a Similar Paper Order a Different Paper

Purpose of Assignment

The Case Study focuses on CVP (Cost-Volume-Profit), break-even, and margin of safety analyses which allows students to experience working through a business scenario and applying these tools in managerial decision making.

Resources

  • Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC)
  • Tutorial help on Excel and Word functions can be found on the Microsoft Office website.
  • There are also additional tutorials via the web offering support for Office products.

  • 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.

    Assignment Steps – 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.
  • Complete calculations/computations using Microsoft Word or Excel.

    Great students hand in great papers. Order our essay service if you want to meet all the deadlines on time and get top grades. Professional custom writing is the choice of goal-focused students. Word on the online streets is... we're simply the best!

    Get a 15% discount on your order using the following coupon code SAVE15


    Order a Similar Paper Order a Different Paper