You are the bookkeeper for Brad's Vegan Ice Creamery. Bradley Stanton, the owner of Brad's Vegan...
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You are the bookkeeper for Brad's Vegan Ice Creamery. Bradley Stanton, the owner of Brad's Vegan Ice Creamery, has called a meeting with you (the bookkeeper) and Melinda (the sales manager) to discuss the results of operations for the year. In preparation for the meeting, you have identified and calculated key budget variances (Activity 6.1). Profit & Loss Budget ($000) Actual ($000) Variance ($000) Favourable or Unfavourable Sales Volume Sales 795,000 750,000 $12,000 $14,310 $2,310 Favourable Less Cost of Goods Sold $6,750 $8,586 $1,836 Unfavourable Gross profit $5,250 $5,724 $474 Favourable Less Operating Expenses: Wages & Commission $1,800 $1,940 $140 Unfavourable Rent $800 $800 SO Advertising $650 $890 $240 Unfavourable Insurance $240 $240 SO Other $100 $230 $130 Unfavourable Total Expenses $3,590 $4,100 $510 Unfavourable Net Profit $1,660 $1,624 $36 Unfavourable The Actual sales volume has increased; so is the costs. The selling price per litre actually increased slightly compared to budget. The dollars per litre Actual price is $18.00 and Budgeted prices per litre is $16.00 A. What can we do to control these costs? Discuss about one of your ideas for controlling costs. For example, you'll try to reduce Cost of Goods Sold by 10% while maintaining the same sales volume. B. How much of an increase in profit do you think we can make over the next year, assuming all other sales and expense amounts remain constant? Explain how your idea would have an impact on profits. Suggest some budget process and review milestones to implement your idea. For example, you'll target reducing COGS by a small percentage each quarter to achieve a total 10% reduction for the year. You'll plan to do the calculations and review each month to make sure you are on track to hit your quarterly milestone targets. You are the bookkeeper for Brad's Vegan Ice Creamery. Bradley Stanton, the owner of Brad's Vegan Ice Creamery, has called a meeting with you (the bookkeeper) and Melinda (the sales manager) to discuss the results of operations for the year. In preparation for the meeting, you have identified and calculated key budget variances (Activity 6.1). Profit & Loss Budget ($000) Actual ($000) Variance ($000) Favourable or Unfavourable Sales Volume Sales 795,000 750,000 $12,000 $14,310 $2,310 Favourable Less Cost of Goods Sold $6,750 $8,586 $1,836 Unfavourable Gross profit $5,250 $5,724 $474 Favourable Less Operating Expenses: Wages & Commission $1,800 $1,940 $140 Unfavourable Rent $800 $800 SO Advertising $650 $890 $240 Unfavourable Insurance $240 $240 SO Other $100 $230 $130 Unfavourable Total Expenses $3,590 $4,100 $510 Unfavourable Net Profit $1,660 $1,624 $36 Unfavourable The Actual sales volume has increased; so is the costs. The selling price per litre actually increased slightly compared to budget. The dollars per litre Actual price is $18.00 and Budgeted prices per litre is $16.00 A. What can we do to control these costs? Discuss about one of your ideas for controlling costs. For example, you'll try to reduce Cost of Goods Sold by 10% while maintaining the same sales volume. B. How much of an increase in profit do you think we can make over the next year, assuming all other sales and expense amounts remain constant? Explain how your idea would have an impact on profits. Suggest some budget process and review milestones to implement your idea. For example, you'll target reducing COGS by a small percentage each quarter to achieve a total 10% reduction for the year. You'll plan to do the calculations and review each month to make sure you are on track to hit your quarterly milestone targets.
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Related Book For
College Accounting
ISBN: 978-1111528126
11th edition
Authors: Tracie Nobles, Cathy Scott, Douglas McQuaig, Patricia Bille
Posted Date:
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