MODULE 2, ASSIGNMENT 4
October 22, 2013 Topic: Standard Costing, Variance Analysis and Budgets
Overview
The main topics for Assignment 4 are standard costing, variance analysis, and budget creation. Accountants of all management levels often have to analyze variance reports in order to help in the decision-making process. Through the differentiation of costs into fixed and variable classifications, managers are better able to construct break-even charts and other decision-making and control tools. Understanding cost breakdown can better determine where the inefficiencies of the operations lie, and determine the first step towards enhancing the efficiency of an operation. In addition, cost analysis helps toward the creation of
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CMA Canada 4
TM
New Look Jacket Inc.
In early 2013, the CEO of the New Look Jacket Inc. (NLJ) was reviewing the 2012 operating results (see Exhibit 1). He was pleased to see that sales and net income were higher than the budget, but he had a feeling that the aggregated numbers were hiding some information. He decided to call in the company’s newly hired controller, a Certified
Management Accountant, to ask for a variance analysis.
NLJ produces and sells two lines of jackets: nylon and leather. The market for nylon jackets is large and competitive, but the leather jacket market has traditionally been small with only a few competing manufacturers. During 2012, fashion trendsetters highlighted leather jackets, creating a ten-time increase in the market’s demand for leather jackets. Unfortunately, NLJ did not foresee this trend and had planned sales of only 5,000 leather
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WeaveTech, formally known as Johnson-Ware is a military and security apparel company entering into the high-end performance clothing market. Before the acquisition by CVX Partners, WeaveTech which was formed in 1905, relied exclusively on the military (70%) and security (30%) customer base. The need to change the company’s customer base from military and security to high-end performance clothing market apparently arose from the allure of the later market segment and the dwindling growth of the military and security market (Beer & Swiercz, 2015). The departure of Jack Davidson, a retired US Navy Rear Admiral, and WeaveTech CEO from 1983 to 2012 in addition to the conclusion of the Afghanistan and Iraq Wars meant that the traditional market was losing its reliability. Due to the unreliability, there was a need to redesign the customer base and to take advantage of the high-end market segment.
With other companies starting to encroach upon the Jeans market share, Levi’s decided to introduce a new product. With the goal to gain profits, Levi’s pursued diversification with the new product. This product was formal clothing for men.
Analyzing the industry using Porter’s Five Forces, it can be seen that the Outdoor Apparel industry is very competitive. The threat of entry is very high, with several large conglomerates making acquisitions in the industry and established apparel companies such as Polo Ralph Lauren making expansions into sports apparel. With several brands such as North Face in the high end of the industry, as well as Columbia and several private labels dominating the middle and lower ends, a large number of substitutes are available. Buyers have large bargaining power, as end consumers could easily switch to another brand, while at the same time wholesalers are
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First research objective was to determine whether it is profitable for J.Crew to shift their brand focus to a ‘sustainablity’ business model instead of resuming their position in the fast fashion industry.
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The financial returns for the other three properties are shown in the following exhibit (Exhibit 6).
Of the hundreds of named brand clothing that form part of the retail and fashion industry I chose to compare, for my analysis, Abercrombie & Fitch, Forever 21, American Eagle, and H&M. These stores are prominent, well-known for selling apparel, shoes, and accessories by the means of offering sales and promotions to their customers. This is a clever strategy for attracting customers, allowing them to believe that they bought goods at affordable, convenient prices – and not to mention the prestigious name prescribed to the clothing brands. Using keyhole.co as my main source, I obtained relevant and valuable information regarding the status of these brands. My intentions were to compare a period of 14 days, however, due to the limited access that I received from my free trial, the program only allowed me to see fewer of the dates than I anticipated. I want to take this opportunity and mention ahead of time that due to the various and distinctive products that are sold from these stores, when looking for the “spending capacity” I decided to focus on shirts/ jeans for men and women and compare the prices among them since each of these retailers carry those items and as a way to make this report easier to contrast and comprehend. Also, when approaching the section of “setting”, I screen-shotted some of the images on Instagram and made them into a collage to separate the type of clothes and trends that each of these brands sell currently. In the following modules
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Hawthorne characterizes the government as an overbearing dominant through the usage of extended metaphor. For example, Hawthorne utilizes the American eagle to symbolize the US Federal Government in order to better convey his thoughts. In the beginning, Hawthorne describes the eagle to be something that is strong and heroic with the intention to look out for the safety of the people. Eventually, he further explains that the people look to the eagle for comfort and rely on it for their safety. Hawthorne then reveals his attitude about the US by sharing that the eagle isn’t looking out for the good of the people with that “great tenderness” that the people seek and that the eagle is willing to abandon “her nestlings” whenever she pleases.
The U.S. women’s apparel industry market is mature, given that the average growth rate from 2005 to 2007 was 4.66%. Within the industry, there are 6 categories of clothing in which companies compete: haute couture, designer, bridge, better, moderate, and budget. Each category targets customers with different needs and different price ranges, with haute coutre and designer clothing ranging upwards from $10,000 and moderate