Kipling will use the Accrual Method of accounting due to the size of their business. Kipling is
Question:
Kipling will use the Accrual Method of accounting due to the size of their business. Kipling is owned by VF Corporation, a publicly traded business that owns an abundance of apparel companies, including The North Face, Timberland, and Vans. For VF Corporation and Kipling to get the most accurate picture of Kipling’s profitability, they want to record their revenues as they are earned and their expenses as soon as they are incurred. As a large retail company where sales fluctuate by season, Kipling tracks their numbers quarterly. An accrual method gives a more accurate look at their profitability for the year.
Kipling will use a target price pricing strategy to determine the selling price. Currently, masks on the market range from $8 to $25 in price. Currently, all masks of the same type as Kipling masks are selling out in minutes as different retailers continue to replenish their website every few days. With demand being so high and Kipling being a well-known brand, a slight mark-up from the lower end of the price range will still remain competitive while still being conscious of the profit Kipling is aiming to make. Kipling masks will be priced at $12. Kipling currently produces fabric bags and accessories, meaning they already possess the necessary machinery and materials to produce masks. Non-medical grade masks are not expensive to produce; Kipling can produce the mask for 50 cents. The markup on Kipling masks is 2,300%, leaving Kipling with a large profit margin.
Create a 1year Master Budget (refers page 254 & 255 in the textbook) for the business/project.
Prepare Cash budget (and/or Cash Flow statement) and provide a brief analysis of cash flows from Operation, Investing and Financing activities (Cash flow statement analysis)
Break Even Analysis, Target Profit and Margin of Safety in units and Sales Dollars for the Business/Project
Discuss the Return on Investment and/or Economic Value Added for the business/program/project to measure its projected performance.
South Western Federal Taxation 2015 Essentials of Taxation Individuals and Business Entities
ISBN: 9781285438290
18th edition
Authors: James Smith, William Raabe, David Maloney, James Young