1.Bench Marking
To assess the financial strength of the different entities and industries norms benchmarks are used. There are different of ways of assessing the positions of company performances. ( Orlova and Afonin, 2015).
Difference between types of benchmarks:
- In house benchmarkingis an assessment of a business course to a similar course inside the group.
- Competitive benchmarkingis a direct participant-to-participant comparison of a process, method, product or service.
- Industrial benchmarkingis an evaluation to alike or indistinguishable practices within the similar or comparable purposes outside the instantaneous industry.
- Process benchmarkingsketchily theorizes dissimilar business processes or functions that can be experienced in the similar or comparable ways irrespective of the trade.
2.A)
|
Calculation of Break-Even point of Hi-Sierra P/L |
||
|
Particulars |
Units |
Amount ($) |
|
sales |
3960000 |
|
|
No. of units sold |
960 |
|
|
Sales price/ Unit |
4125 |
|
|
Cost of goods sold-Variable |
1680000 |
|
|
Selling and Administration Expense-Variable |
168000 |
|
|
Total Variable Cost |
1848000 |
|
|
Total Variable Cost/ unit |
1925 |
|
|
Contribution Margin/unit |
2200 |
|
|
Cost of goods sold-Fixed |
540000 |
|
|
Selling and Administration Expense-Fixed |
156000 |
|
|
Total Fixed Cost |
696000 |
|
|
Break- Even point in Units |
316.36 |
B)
|
Calculation of Margin of Safety of Hi-Sierra P/L |
|
|
Particulars |
Amount ($) |
|
Sales |
3960000 |
|
Less-Cost of goods sold-Variable |
1680000 |
|
Selling and Administration Expense-Variable |
168000 |
|
Contribution |
2112000 |
|
PV Ratio |
53% |
|
Selling and Administration Expense-Fixed |
156000 |
|
Cost of goods sold-Fixed |
540000 |
|
Total Fixed Cost |
696000 |
|
Break-Even Sales |
1305000 |
|
Margin of Safety at present sales level in $ |
2655000 |
C)
|
Calculation of Increase or decrease in Profit |
|||
|
Particulars |
Units |
Amount/unit ($) |
Amount ($) |
|
Sales price /unit |
15 |
3380 |
|
|
Sales |
50700 |
||
|
less- Cost of goods sold Variable |
15 |
1750 |
26250 |
|
Selling and Administration Expense-Variable |
15 |
155 |
2325 |
|
Total Variable Costs |
28575 |
||
|
Contribution |
22125 |
||
|
Less- Cost of goods sold fixed cost |
540000 |
||
|
Selling and Administration Expense-Fixed |
156000 |
||
|
Total Fixed Cost |
696000 |
||
|
Profit Before Tax |
-673875 |
D)
|
Answer to 2 D |
|||
|
Particulars |
Units |
Amount/unit ($) |
Amount ($) |
|
Sales price /unit |
12 |
3730 |
|
|
Sales |
44760 |
||
|
less- Cost of goods sold Variable |
12 |
1750 |
21000 |
|
Selling and Administration Expense-Variable |
12 |
175 |
2100 |
|
Total Variable Costs |
23100 |
||
|
Contribution |
21660 |
||
|
Less- Cost of goods sold fixed cost |
540000 |
||
|
Selling and Administration Expense-Fixed |
156000 |
||
|
Total Fixed Cost |
696000 |
||
|
Profit Before Tax |
-674340 |
The profit calculated on both the order shows loss but the loss in order 3 is less by $ 465. Therefore, order 3 is more attractive. The loss can be transformed in profits as the company has capacity of producing more units and in this order; there is scope of reducing the variable cost that is packing cost.
3.A)
|
Calculation of Contribution Margin Unit of Gold Coast Surfing P/L |
|||||
|
Product Type |
Sales Price |
Invoice Cost |
Sales Commission |
Variable Cost |
Contribution Margin |
|
Grommit |
$1,250.00 |
$ 890.00 |
$ 60.00 |
$ 950.00 |
$ 300.00 |
|
Kermie |
$ 720.00 |
$ 510.00 |
$ 40.00 |
$ 550.00 |
$ 170.00 |
B)
|
Calculation of Weighted Average Contribution Margin Unit of Gold Coast Surfing P/L |
||
|
Product Type |
Sales Mix |
Contribution Margin |
|
Grommit |
40% |
$ 300.00 |
|
Kermie |
60% |
$ 170.00 |
|
Weighted Average |
$ 222.00 |
C)
|
Calculation of Break-Even Sales Volume of Gold Coast Surfing P/L |
||||
|
Product Type |
Sales Price |
Sales Mix |
Break-Even Volume |
Sales Revenue |
|
Grommit |
$ 1,250.00 |
40% |
68 |
$ 84,459 |
|
Kermie |
$ 720.00 |
60% |
101 |
$ 72,973 |
|
Fixed Cost |
$37,500 |
|||
|
Weighted Average |
$ 222.00 |
|||
|
Break- Even Point units |
169 |
|||
|
Total Revenue |
$ 157,432 |
4.
|
Computation of Cost under Traditional Method of The Outback Camping Company |
||
|
Particulars |
Desert Strom |
Alpine |
|
Direct Material |
4256000 |
882000 |
|
Direct Labor |
4659200 |
1528800 |
|
Overhead |
256000 |
84000 |
|
Total Cost |
9171200 |
2494800 |
|
Computation of Cost under ABC method of The Outback Camping Company |
||
|
Particulars |
Desert Strom |
Alpine |
|
Set up |
42000 |
18000 |
|
Construction of Machines |
130000 |
70000 |
|
Inspections |
12857 |
7143 |
|
Total Cost |
184857.14 |
95142.9 |
- Concluding the accurate cost of the product`
- Helps in decision making
- Reduces the cost
- Advantage in the service industry. (Sigüenza Guzmán, Abbeele and Cattrysse, 2014).
5.
|
Calculation of Variances of BB Bottling Company P/L |
||
|
Particulars |
Outcome |
Favorable/ Unfavorable |
|
Direct material Price Variance |
$ 4,100.00 |
Favorable |
|
Direct Material Quantity Variance |
$ (3,400.00) |
Unfavorable |
|
Direct Labor rate |
$ 2,475.00 |
Favorable |
|
Efficiency variance |
||
|
Labor |
$ 322,600.00 |
Unfavorable |
|
Material |
$ (8,500.00) |
Unfavorable |
6.1)
|
Calculation of Contribution Margin Unit of Maxie Pty. |
|||
|
Product Type |
Sales Price |
Variable Cost |
Contribution Margin |
|
Plain |
$ 20.00 |
$ 12.00 |
$ 8.00 |
|
Fancy |
$ 35.00 |
$ 24.50 |
$ 10.50 |
3.
|
Calculation of Weighted Average Contribution Margin of Maxie Pty. |
||
|
Product Type |
Sales Mix |
Contribution Margin |
|
Plain |
60% |
$ 8.00 |
|
Fancy |
40% |
$ 10.50 |
|
Weighted Average |
$ 9.00 |
4.
|
Calculation of Break Even Sales of Maxie Pty. |
||||
|
Product Type |
Sales Mix |
Sales Price |
Break-Even Volume |
Sales Revenue |
|
Plain |
60% |
$ 20.00 |
3000 |
$ 60,000.00 |
|
Fancy |
40% |
$ 35.00 |
2000 |
$ 70,000.00 |
|
Fixed Cost |
$45,000 |
|||
|
Weighted Average |
$ 9.00 |
|||
|
Break- Even Point units |
5000 |
|||
|
Break- Even Sales |
$ 130,000.00 |
5.
|
Calculation of Units of Maxie Pty for Fancy Shoes |
||
|
Particulars |
Amount $ |
|
|
Sales Revenue |
$ 70,000.00 |
|
|
Price per unit |
$ 35.00 |
|
|
No. units sold |
2000 |
|
|
NO. of units to be sold for target profit |
900 |
|
7.1)
|
Statement of Cost of product of Neo Solar Ltd |
|
|
Particulars |
Amount($) |
|
Direct Material |
250000 |
|
Direct Material handling and storage |
25000 |
|
other overhead |
108000 |
|
Direct Labor Rate |
240000 |
|
Price of the job |
623000 |
2)
|
Calculation of Price @10% up on Material of Neo Solar Ltd |
|
|
Particulars |
Amount($) |
|
Direct Material |
275000 |
|
Direct Material handling and storage |
27500 |
|
other overhead |
108000 |
|
Direct Labor Rate |
240000 |
|
Price of the job |
650500 |
Reference:
Orlova, L.V. and Afonin, Y.A., 2015. Modern management tools: benchmarking and leasing. Oxford Journal of Scientific Research, 3(1), p.292.
Qin, B. and Han, S.S., 2013. Emerging polycentricity in Beijing: Evidence from housing price variations, 2001–05. Urban Studies, 50(10), pp.2006-2023.
Risthaus, T. and Grimme, S., 2013. Benchmarking of London dispersion-accounting density functional theory methods on very large molecular complexes. Journal of chemical theory and computation, 9(3), pp.1580-1591.
Sigüenza Guzmán, L., Van den Abbeele, A. and Cattrysse, D., 2014. Time-driven activity-based costing systems for cataloguing processes: a case study.
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