Essay about Financial Analysis Task 5 Wgu

4519 WordsAug 24, 201319 Pages
Financial Analysis Task 5 Part B-Report to CEO B1. Custom Snowboards sales history has been steadily increasing per the table below. CSI has had small growth in sales with an equal increase in COGS. The COGS is relative to the increase in the net sales, however, CSI should look further into ways they can decrease their COGS line item in order to see more profit growth from year to year. We can see on the Horizontal Analysis below that net sales, COGS and Profit all had the same increases from years 12 to 13 and from years 13 to 14. This is indicative of CSI needing to do more cost based analysis to see where they can make production cost cuts and boost sales. Per the data, operating costs also increased alongside the net sales. Items such…show more content…
I would suggest that CSI go ahead with activity based costing to see what units are costing them the most to produce and if they are profitable. Activity based costing will match the costs with the cost drivers to see where most of the unit cost is being absorbed. CSI will be able to use this method to allocate the correct indirect and direct costs to production, advertising etc. I would suggest that management heads come together to create an SOP for their production line that includes evaluating the entire supply chain. This will help ensure that CSI knows where they are making profits, where big money is being spent and where there are possibilities for cost reduction. I would also suggest the CSI build a better salary schedule that includes sales commissions and sets base or “step” schedules for admin and employees. Minor

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