Analysis On Desert Valley 's Budget Adjustment

If we assume that the 1991 products, prices, sales volumes, materials costs and overhead are unchanged from 1990 and that there are no process improvements that would lead to a reduction in the direct labor of a product, it can be inferred that the company’s profits would be identical to those of 1990, as stated in Appendix B. However, if the same is assumed

The weather has an impact on the procurement of grains and makes it very volatile.  In 1990 a poor harvest contributed to low inventories and sales volume.   Willis

If the company decided to sell the new product at price of D.Cr. 8.20, that means the full fixed expense of 1.20 is covered and the company will make high profit. However, the selling price of D.Cr. 8.20 is very high and under this price the company will sell the new product at a lower volume than what the company planned sale volume in the budget and that will affect the company in the market as a strong competitor in the food manufacturing. According to the case, the company sales volume drop to 30 tons when the product was sold at the price of D.Cr. 8.2. Thus, my recommendation are as follows:

Although the company did show an increased gross profit of $8,255,000 with $6,358,000 less Net Sales in 2013 versus 2012, that increase is due to the reduction in product Cost of Goods Sold by $14,613,000. Since increases in product price will negatively affect sales, one of management’s primary goals is to keep prices stable. This objective is achieved through implementation of cost cutting programs, investing in more efficient equipment, and automation of more steps in the production process.

This article written in the Texas Agriculture, a magazine published by the Texas Farm Bureau, is about all the factors impacting farmers that effect their income. Over the past couple years, a combination of things has caused the average Texas farmers income to drop. The primary audience for this article is the farmers in Texas as they are experiencing these issues first hand. The secondary audience would be consumers who have noticed price fluctuations in products at the store and are wondering the reason.

Another concern identified, is the utilities expense budget for utilities in Year 9 which is $150,000. This amount is identified as a fixed amount and is unrelated to actually production activities and manufacturing efficiency. Considering that production levels and activity fluctuates throughout the year, the budget for utilities should be a variable item. An example; from Year 7 to Year 8, the utilities expenses increase by $15,000 and with this detection, ways to reduce this expense should be investigate. Another concern is a duplicated line item under the Selling, General, and Administrative Budget for Utilities and Utilities and Services. Another issue for concern, Total Variable Cost was reported to be lower; however was not enough for the lack of sales combined with an increase in advertising and transportation which resulted in an overall negative result. The low Net Sales directly impacted the Contribution Margin which decreased by $49,397. Overall, these concerns indicate the need for a flexible budget with variance analysis.

The factors we looked at were the yearly yield, the salvage value, and the wholesale unit cost. Through our sensitivity analysis, the profitability of our olive farm is most sensitive to changes in the yield of olives. Out of these three variables, maintenance costs have the least effect on our farm. If, for example, both maintenance costs and wholesale unit sales remain at their expected values, but our annual yield is cut in half, our IRR drops to 9.82% and our NPV is -$6,662.98. This is with a very conservative estimate of a 10% MARR. In this situation, the farm would just about break

Based on the 1988 Supreme Court case of Corn Product Refining Co. v. Commissioner (350 U.S. 46; 76 S.Ct. 20; 100 L.Ed. 29), hedging transactions were determined to be used to support business practices of certain commodities. Such hedging transactions are normal for businesses engaged in commodity sales such as coal or corn to protect against market

“Economists at the University of California, Davis said that agriculture, once a $44 billion annual business in California, will suffer a financial hit of $2.2 billion due to revenue losses and higher water costs” (Associated Press, 2014). Many farmers are going out of business because the production costs have increased with rising inflation, while revenue has decreased. Others have reduced their farmland plantations which decreases the crop production. Some of the affected crops include oranges, pistachios and rice. One example of how this affects the nation is the California almonds. “California [is] the source of eighty percent of the world’s almonds” (Bloomberg, 2014). This year farmers had to come up with new tactics to rescue the nut from drought “by diverting the water used for vegetables and drilling more water wells to keep the trees hydrated” (Bloomberg, 2014). Farmers are not the only group of workers affected by the drought.

The demand for corn has greatly increased because of its many new found uses but mainly because it has been discovered that corn can be use as an alternate energy source. This great demand for corn has increased many area of farming and production of corn here and other countries such as Mexico and South America. This great demand has lead to an increase in farmers who are willing to cash in on these cash crops and try to earn a few quick dollars because of the great demand for it. In 2007 Corn farmer saw record profits because famer where getting twice as much for corn as they did in previous years. The same trend continued but farmers dealt with so many obstacle such as weather, bugs and lack of

The next step would be for management to know precisely how their decision to downsize capacity would impact the firm’s future operating costs, and also identify specific areas in which the firm could achieve additional cost reductions. Additionally, the cost analysis would help forecast the firm’s operating costs and projected profits (or losses) for the upcoming fiscal year. However, before we can proceed with such analysis, an examination of how the various categories of Continental’s costs behave is in order.

The true variable costs to Beauregard Textiles include the Direct Labor, Material, Material Spoilage, and Direct Department Expense. By excluding those expenses not related to the production of T-30, we can calculate the contribution margin for Beauregard using unit sales price and unit variable cost. Contribution margin is a measurement of the profitability of a product and is an excellent management tool to help determine whether to keep or drop certain aspects of the business. A positive contribution margin means that the company should produce the product, a negative contribution margin means the company is likely to suffer from every unit it produces.

Cost of goods sold will continue to be an area that further increases as a result of management decisions. We estimate that COGS will increase from 42389.35 to 64621.89, which is an

From its definition it can be noticed that hedging is a strategy employed by companies in an effort to safeguard their economic position and to prevent the company from the losses which are associated with the unforeseen risks. Companies can hedge against risks which are associated with losses by taking control of their future purchases. The commodity prices vary in different markets and are caused or influenced by different economic factors. Some commodities are very scarce and with the increased depletion subject to the global demand in different foreign markets, the prices are set to be hiked in response to the established demand which positions the companies that use those particular commodities to have cash flow problems.

A recent report from HSBC isn’t quite so alarming…unless you read between the lines. “World agricultural markets,” it says, “have become so finely balanced between supply and demand that local disruptions can have a major impact on the global prices of the affected commodities and then reverberate throughout the entire food chain.”