? ? Comprehensive Problem Cost Volume Profit Analysis Based in Italy, Datura, Ltd., is an international importer-exporter
Fantastic news! We've Found the answer you've been seeking!
Question:
?
?
Transcribed Image Text:
Comprehensive Problem Cost Volume Profit Analysis Based in Italy, Datura, Ltd., is an international importer-exporter of pottery with distribution centers in the United States, Europe, and Australia. The company was very successful in its early years, but its profitability has since declined. As a member of a management team selected to gather information for Datura's next strategic planning meeting, you have been asked to review its most recent contribution margin income statement for the year ended December 31, 2016, which appears below: Sales Revenue Less: variable costs Purchases Distribution (2) Datura, Ltd Contribution Margin Income Statement For the Year Ended December 31, 2016 Contribution Margin Less Fixed costs Requirements: (1) Sales Commission Total variable costs Net operating income In 2016, Datura sold 15,000 sets of pottery. a. b. Distribution Selling General and administrative Total fixed costs C. d. e. 6,000,000 2,115,000 1,410,000 For each set of pottery sold in 2016, calculate the following: Sales price per unit variable purchase cost per unit variable distribution cost per unit variable sales commission per unit contribution margin per unit Calculate the breakeven point in units and in sales euros 985,000 1,184,000 871,875 € 13,500,000 9,525,000 € 3,975,000 € 3,040,875 934,125 (3) Historically, Datura's total variable costs have been approximately 60% of sales. What is the ratio of variable costs to sales in 2016? € (5) (6) How would fixed costs had been affected if Datura sold only 14,000 sets of pottery in 2016? How many sets of pottery would Datura have to sell to realize a net operating income of €2,500,000? What is the degree of operating leverage for Datura in 2016? What would happen if sales saw an increase of 8% in 2017? Comprehensive Problem Cost Volume Profit Analysis Based in Italy, Datura, Ltd., is an international importer-exporter of pottery with distribution centers in the United States, Europe, and Australia. The company was very successful in its early years, but its profitability has since declined. As a member of a management team selected to gather information for Datura's next strategic planning meeting, you have been asked to review its most recent contribution margin income statement for the year ended December 31, 2016, which appears below: Sales Revenue Less: variable costs Purchases Distribution (2) Datura, Ltd Contribution Margin Income Statement For the Year Ended December 31, 2016 Contribution Margin Less Fixed costs Requirements: (1) Sales Commission Total variable costs Net operating income In 2016, Datura sold 15,000 sets of pottery. a. b. Distribution Selling General and administrative Total fixed costs C. d. e. 6,000,000 2,115,000 1,410,000 For each set of pottery sold in 2016, calculate the following: Sales price per unit variable purchase cost per unit variable distribution cost per unit variable sales commission per unit contribution margin per unit Calculate the breakeven point in units and in sales euros 985,000 1,184,000 871,875 € 13,500,000 9,525,000 € 3,975,000 € 3,040,875 934,125 (3) Historically, Datura's total variable costs have been approximately 60% of sales. What is the ratio of variable costs to sales in 2016? € (5) (6) How would fixed costs had been affected if Datura sold only 14,000 sets of pottery in 2016? How many sets of pottery would Datura have to sell to realize a net operating income of €2,500,000? What is the degree of operating leverage for Datura in 2016? What would happen if sales saw an increase of 8% in 2017?
Expert Answer:
Answer rating: 100% (QA)
1 a Selling price per unit Total salesTotal units 13500000 15000 900 euros b Variable purchase cost per unit total purchase cost total units 600000015... View the full answer
Related Book For
Advertising and Promotion An Integrated Marketing Communications Perspective
ISBN: 978-1260152302
11th Edition
Authors: George E Belch, Michael A Belch
Posted Date:
Students also viewed these accounting questions
-
The condensed single-step income statement for the year ended December 31, 2014, of Conti Chemical Company, a distributor of farm fertilizers and herbicides, follows. Selected accounts from Conti...
-
The condensed single-step income statement for the year ended December 31, 20Ã9, of Sunderland Chemical Company, a distributor of farm fertilizers and herbicides, appears as follows: Selected...
-
In its income statement for the year ended December 31, 2010, Pele Company reported the following condensed data Instructions(a) Prepare a multiple-step income statement.(b) Prepare a single-step...
-
Determine the degrees of freedom under the following conditions: (a) Tl-20 wt% Pb at 325 C and 400 C; (b) Tl-40 wt% Pb at 325 C and 400 C; (c) Tl-90 wt% Pb at 325 C and 400 C. Refer to the phase...
-
Assets X and Y are perfectly positively correlated. The standard deviations are X = 0.312 and Y = 0.426. What is the standard deviation of a portfolio with weights wX = 40% and wY = 60%?
-
A uniform thin rod of length \(\ell\) and mass \(m\) is suspended from fixed points \(A\) and \(B\) by two identical massless springs with zero natural length and spring constant \(k\). At...
-
The following scenarios describe situations faced by hypothetical companies that currently have a centralized organization structure. As you review each of the scenarios, provide your opinion as to...
-
The Feed 'N Ship Ranch fattens cattle for local farmers and ships them to meat markets in Kansas City and Omaha. The owners of the ranch seek to determine the amounts of cattle feed to buy so that...
-
For the gas station site your firm has been provided a budget of $30,000 to perform a field investigation. Design an investigation to further evaluate the extent of contamination at and downgradient...
-
While I think of it, you need to prepare a memo (C-2-1) addressing the following issues: 1. Describe the two forms of accounts receivable confirmation requests that you used and indicate the factors...
-
2:Second and higher order ODEs with initial conditions Initial value problems (IVPS) The higher order ODE with initial conditions can be converted into the system of first order ODEs of the types For...
-
Using the completing-the-square method, find the vertex of the function f(x)=-2x^(2)+12x+5 and indicate whether it is a minimum or a maximum.
-
Proton Limited acquired the net assets and contingent liabilities of Electron Limited for $70 000. Electron Limited's net assets and contingent liabilities were: total assets $94 000; total...
-
1. Identify 2 types of financial loss from a crisis event. ( Note that a financial loss is not the same as a crisis in a financial market.) Provide an example of each type of loss. Which one of your...
-
A 0.50 kg object is attached to a spring with force constant 169 N/m so that the object is allowed to move on a horizontal frictionless surface. The object is released from rest when the spring is...
-
What is the value of egg_count after running this code? egg_count = 0 def buy_eggs(): egg_count += 12 buy_eggs()
-
K points) pos Bank A advertises a money market account that pays 3.6% compounded quarterly. Bank B advertises a money market account that pays 3.5% compounded daily. a) Determine the annual...
-
Evaluate each logarithm to four decimal places. log 0.257
-
Digital advertisers seem to want to have their own effectiveness measures, while eschewing those of traditional advertisers. What are the pros and cons of this position? Argue for one side or the...
-
The chapter opener discusses how DASANI was able to use creative advertising to reposition the brand and make it the leading brand of bottled water. Evaluate the creative strategy used by The...
-
What are the major challenges facing the newspaper industry and the use of newspapers as advertising medium? How can newspapers respond to these challenges?
-
Motion pictures and television programs are responsible for a misconception about the way in which trials proceed. Explain.
-
Describe the basic difference between the systems of courts in the United States and in Canada.
-
Explain why a legal rule in one province may differ from that in another province.
Study smarter with the SolutionInn App