Case Study #1 Report

Case 2-32 Cost Structure;Break-Even and Target Profit Analysis

First - answer the case study 2-32 in McGraw Hill Connect. Then, use the correct answers to write the case study report. The actual case study in McGraw Hill Connect is worth 10 points. I have given you unlimited opportunities to get the correct answers on the case study in Connect.The remainder of the50points comes from your report.

Answer each question as if you were a consultant hired by the company and are presenting to the president.

For each answer explain the terminology and concepts used. For example, in #1 rather than just give the breakevenfor each scenario, explain the change in the volume of sales, explain the calculation - this is a professional report from a consultant to an executive committee.

Use outside sources when necessary BUT MAKE SURE YOU CITE THEM!

When giving a recommendation, back it up with numbers. i need the written part. 4 pg count.

Use income before income taxes in your operating leverage computation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute Pittman Company's break-even point in dollar sales for next year assuming: Note: Round CM ratio to 3 decimal places and final answers to the nearest dollar amount. Break-Even Point a. The agents' commission rate remains unchanged at 15%. 16,497.500 b. The agents' commission rate is increased to 20%. 18,854,286 c. The company employs its own sales force 21,392,211 Use income before income taxes in your operating leverage computation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assume that Pittman Company decides to continue selling through agents and pays the 20% commission rate. Determine the dollar sales that would be required to generate the same net income as contained in the budgeted income statement for next year. Note: Round CM ratio to 3 decimal places and final answer to the nearest dollar amount. Show less A Volume of sales (in dollars) 28,000,000 Use income before income taxes in your operating leverage computation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 20% commission rate) or employs its own sales force. Note: Do not round intermediate calculations. Volume of sales (in dollars) 528,498,400 Use income before income taxes in your operating leverage computation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the degree of operating leverage that the company would expect to have at the end of next year assum income before income taxes in your operating leverage computation.) Note: Round your answers to 2 decimal places. Degree of Operating Leverage a. The agents' commission rate remains unchanged at 15%. 3.060 b. The agents' commission rate is increased to 20%. 4.34 c. The company employs its own sales force. 7.88