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- Bigdog Company distributes pet products. Its ABC system has five activities: Activity Area Cost Driver Rate in 2020 1. Order processing $50 per order 2. Line-item ordering $5 per line item 3. Store deliveries $40 per store delivery 4. Carton deliveries $6 per carton 5. Shelf-stocking $19 per stocking hour Rufus McBrain, the controller of Bigdog Company, wants to use this ABC system to examine customer profitability. He focuses on two of his customers to find out the insights he can gain from using this system. Data for these two customers in April 2020 are as follows: Pet Store Annerley RSPCA store Springwood Total orders 13 7 Average line items per order 11 19 Total store deliveries 5 7 Average cartons shipped per store delivery 21 18 Average hours of shelf stocking per store delivery 0.5 0.75 Average revenue per delivery $2,600 $1,900 Average cost of goods sold per delivery…Bigdog Company distributes pet products. Its ABC system has five activities: Activity Area Cost Driver Rate in 2020 1. Order processing $50 per order 2. Line-item ordering $5 per line item 3. Store deliveries $40 per store delivery 4. Carton deliveries $6 per carton 5. Shelf-stocking $19 per stocking hour Rufus McBrain, the controller of Bigdog Company, wants to use this ABC system to examine customer profitability. He focuses on two of his customers to find out the insights he can gain from using this system. Data for these two customers in April 2020 are as follows: Pet Store Annerley RSPCA store Springwood Total orders 13 7 Average line items per order 11 19 Total store deliveries 5 7 Average cartons shipped per store delivery 21 18 Average hours of shelf stocking per store delivery 0.5 0.75 Average revenue per delivery $2,600 $1,900 Average cost of goods sold per delivery…Computing breakeven sales and sales needed to earn a target profit graphing CVP relationships, performing sensitivity analysis Diversified Investor Group is opening an office in Boise, Idaho, Fixed monthly costs are office rent ($8,000) depreciation on office furniture ($1,700) utilities ($2,400) special telephone lines ($1,500), a connection with an online brokerage service ($2,500), and the salary of a financial planner ($11,900) Variable costs include payments to the financial planner (9% of revenue, advertising (11% of revenue), supplies and postage (4% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Requirements Use the contribution margin ratio approach to compute Diversified’s breakeven revenue in dollars lf the average trade leads to $800 in revenue for Diversified, how many trades must be made to break even? Use the equation approach to compute the dollar revenues needed to earn 2 monthly target profit of $11,200. Graph…
- Customer profitability, distribution. Green Paper Delivery has decided to analyze the profitability of five new customers. It buys recycled paper at $20 per case and sells to retail customers at a list price of $26 per case. Data pertaining to the five customers are: Green Paper Delivery’s five activities and their cost drivers are: Compute the customer-level operating income of each of the five retail customers now being examined (1, 2, 3, 4, and 5). Comment on the results. What insights do managers gain by reporting both the list selling price and the actual selling price for each customer? What factors should managers consider in deciding whether to drop one or more of the five customers?Duncan’s Pizzas is a chain of pizza stores. Pizzas are made fresh in-store, and then delivered to customers by a fleet of drivers. The senior management team has identified the strategic priorities for the business as on-time delivery and product quality. Required: a) For each of the strategic priorities, suggest three performance measures. (6 marks) b) If the company is successful in achieving challenging targets for these performance measures, will it also necessarily achieve high profitability? Explain your answer. (4 marks, maximum 400 words)Please answer all the 4 requirement correctly with good presentation using commas and dollar sign in each figure C. You have the following information about a restaurant opening up in Boston and you are asked to help provide information on pricing. Although there are other factors to consider, you are being asked to base your suggestions on a cost perspective. Owner Investment 2,000,000 Funds borrowed 3,000,000 Food cost 33% Labor cost 35% Other V.C. 10% Building 3,000,000 Furniture and Equipment 1,200,000 Management Salaries 140,000 Other Fixed Costs 200,000 Interest % 6% Depreciation on FF&E 14.29% Depreciation on Building 5% What is the break-even point in…
- Duncan’s Pizzas is a chain of pizza stores. Pizzas are made fresh in-store, and then delivered to customers by a fleet of drivers. The senior management team has identified the strategic priorities for the business as on-time delivery and product quality.Required:a) For each of the strategic priorities, suggest three performance measures. b) If the company is successful in achieving challenging targets for these performance measures, will it also necessarily achieve high profitability? Explain your answer. (maximum 400 words)Perform Goal Seek Analysis in Excel, Technique of Model Driven Decision Support System. Using goal seek analysis technique of Model Driven Decision Support System, predict the number of pizza to be sold in a day to achieve the total income of Rs 272000/= while excluding all expenses like cost per Pizza (RS. 1000), salary per person (Rs. 1000 per day) we have 3 employees, shop rent per day (Rs. 2000) and 5% Tax. Price of a pizza is fixed to Rs 2500. Formulas on answer sheet as well.Crawfords Books and Things has a traditional bookstore housed downtown Charlotte. The store has been there forty years, and many customers love the fact that they can hold the books in their hands and browse the offerings. Crawfords just started an online book division for people who like to order books online. EVA for the Charlotte store is about $13 million, while EVA for the online division shows a value of -$2.2 million. A. Explain why it might be better to evaluate the online division using a balanced scorecard. B. Suggest two measures for the customer dimension that would be appropriate for the online division and two measures for the internal processes dimension of the balanced scorecard that would be appropriate for the online division.
- Service Organization Income Statement Healing Hands Massage Hut offers high-end, specialized massages and grooming services, including manicures, pedicures, facials, and full-body massages. Healing Hands is a new startup service organization that generates monthly sales of 200,000. As a startup organization, Healing Hands spends 5,000 a month on advertising in local newspapers and on social media sites. In addition, each month Healing Hands spends 100,000 to pay its team of highly specialized massage therapists, and 10,000 to a technology company (to handle the companys website, massage appointment scheduling activities, and customer communications). Further, the company incurs a 15,000 monthly expense to rent its hut space in a hip new retail market. Finally, Healing Hands incurs 20,000 of monthly administrative expenses. Required: 1. Prepare an income statement for Healing Hands for the past month. 2. Briefly explain why Healing Hands income statement has no line item for cost of goods sold.María has 2 “carretas” for selling her products in shopping centers (One “carreta” per location: Plaza Carolina, Plaza del Sol). Each location sells annually $285,000 (Total Sales Revenues $570000 = 285000 * 2) with a 40% Gross Margin. Annually each location has salaries and related expenses of $45,000. Annual expenses for Rent and all other expenses are $56,000 for each location. To improve sales and profits, Maria is considering the strategy of adding a “carreta” in Plaza Las Américas (PLA) where she expects to sell per year $345000. In PLA annual salaries and related expenses would also be $45,000, but rent and other costs would be $68000. The initial investment to start in PLA would be $25,000 (for inventory and some rent prepayments). Required Return is 20%. What is the strategy Net Present Value (adding Plaza Las Américas)?CVP application—determine offering price Tommy Appleton is in charge ofarranging the “attitude adjustment” period and dinner for the monthly meetings of the local chapter of the Management Accountants Association. Tommy is negotiating with a new restaurant that would like to have the group’s business, and Tommy wants to apply some of the cost–volume–profit analysis concepts he has learned. The restaurant is proposing its regular menu prices of $4 for a beforedinner drink and $22 for dinner. Tommy has determined that, on average, the people attending the meeting have 1.5 drinks before dinner. He also believes that the contribution margin ratios for the drinks and dinner are 50% and 40%, respectively.Required:Prepare a memo to Tommy outlining the possible offers he might make to the restaurant owner, and recommend which offer he should make