Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Cost volume profit analysis break even point

18/11/2021 Client: muhammad11 Deadline: 2 Day

Cost-Volume-Profit Analysis

Running head: COST-VOLUME-PROFIT ANALYSIS

1

COST-VOLUME-PROFIT ANALYSIS

5

TO: Management, Bargain Shoe Store

FROM: Senior Accountant

DATE: August 23, 2017

SUBJECT: Promotional Campaign Analysis

The promotional campaign developed by Mary Willis and the advertising department has been fully examined to include an analysis of the current and proposed break even points and margins of safety for Bargain Shoe Warehouse (BSW). Additionally, I have prepared a Cost-Volume-Profit income statement for current operations and for the proposed changes for management consideration.

Break Even Analysis

Mary proposed increasing fixed cost by 24,000 dollars through lighting upgrades and increasing display space. Under Mary’s plan, variable costs would remain unchanged and the price per pair of shoes would drop 5 percent to 38 dollars per pair. The break-even analysis concludes that BSW currently breaks even at 16,875 units sold, whereas, with Mary’s proposal, BSW would not break even until 21,000 units were sold which exceeds current sales by 1,000 units.

Break Even Analysis

Current Business Plan

Mary’s Business Plan

Fixed Costs

$ 270,000.00

$ 294,000.00

Variable Costs

$ 24.00

$ 24.00

Price

$ 40.00

$ 38.00

Break Even Point

16,875 units

21,000 units

Margin of Safety Analysis

Mary projects that sales will increase from 20,000 units currently to 24,000 units when the plan is implemented. As shown below BSW currently operates at a 16 percent margin of safety ratio which would reduce to 13 percent with Mary’s proposal. In other words, BSW could experience a reduction of 3,125 units sold, under the current business model, before operating at a loss, whereas, with Mary’s plan BSW could only suffer a reduction of 3,000 units sold of the projected increase of 4,000 units sold. If BSW’s sales remain constant even after implementing Mary’s business plan, then BSW would be operating at a tremendous loss.

Margin of Safety Analysis

Current Business Plan

Mary’s Business Plan

Units Sold

20,000.00

24,000.00

Actual Sales

$ 800,000.00

$ 912,000.00

Break Even Sales

$ 675,000.00

$ 798,000.00

Margin of Safety Ratio

16%

13%

Reduction in Units Sold

3,125 units

3,000 units

Cost-Volume-Profit Analysis

A Cost-Volume-Profit (CVP) analysis is a study that investigates the effect of cost and volume changes in cost and volume on a company’s profits (Kimmel, Weygandt, & Kieso, 2016). As shown in the CVP analysis below, BSW could more than double their net income with Mary’s business plan.

Cost-Volume-Profit Analysis

Current Business Plan

Mary’s Business Plan

Sales

$ 800,000.00

$ 912,000.00

Variable Costs

$ 480,000.00

$ 504,000.00

Contribution Margin

$ 320,000.00

$ 408,000.00

Fixed Costs

$ 270,000.00

$ 294,000.00

Net Income

$ 50,000.00

$ 114,000.00

Conclusion

The results of the three analyses performed reveals that if Mary’s business plan is based on solid evidence then BSW can more than double net income although there exist several concerns. First, BSW must increase sales by a minimum of 1,000 units sold to break even, if sales do not increase then BSW will operate at a huge loss. Second, changes in the margin of safety ratio are deemed negligible if projected sales are achieved, however, the margin of safety value would decline significantly should BSW experience only half the increase in sales that Mary projects. Third, if BSW experiences an increase in sales volume that is only half of what Mary projected then net income would drop to 38,000 dollars from its current value of 50,000 dollars. Given the potential increase in BSW’s net income by investing in upgrades and reducing the sales price of products it is recommended that Mary’s research be validated before implementing. If Mary’s sales projections cannot be validated, then it is recommended that her business plan not be implemented.

Senior Accountant

References

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2016). Accounting: Tools for business decision making (6th ed.). Hoboken, NJ: John Wiley & Sons.

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Professional Accountant
Premium Solutions
Study Master
Assignment Guru
Phd Writer
Innovative Writer
Writer Writer Name Offer Chat
Professional Accountant

ONLINE

Professional Accountant

I have assisted scholars, business persons, startups, entrepreneurs, marketers, managers etc in their, pitches, presentations, market research, business plans etc.

$37 Chat With Writer
Premium Solutions

ONLINE

Premium Solutions

I find your project quite stimulating and related to my profession. I can surely contribute you with your project.

$40 Chat With Writer
Study Master

ONLINE

Study Master

This project is my strength and I can fulfill your requirements properly within your given deadline. I always give plagiarism-free work to my clients at very competitive prices.

$23 Chat With Writer
Assignment Guru

ONLINE

Assignment Guru

I have done dissertations, thesis, reports related to these topics, and I cover all the CHAPTERS accordingly and provide proper updates on the project.

$40 Chat With Writer
Phd Writer

ONLINE

Phd Writer

I reckon that I can perfectly carry this project for you! I am a research writer and have been writing academic papers, business reports, plans, literature review, reports and others for the past 1 decade.

$24 Chat With Writer
Innovative Writer

ONLINE

Innovative Writer

I have written research reports, assignments, thesis, research proposals, and dissertations for different level students and on different subjects.

$35 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Tanglewood nursing home horncastle - Visual basic pros and cons - Procedural standards for refugee status determination under unhcr's mandate - So sick noah and alex - L houts plastics is a large manufacturer - Nutrition - Disney's america theme park case study - Why you should wear sunscreen persuasive speech - Public Choice and Rent Seeking - Area of a circle worksheet - Three stages of production function ppt - The manufacturing of semiconductor chips produces - Robert conti chord melody assembly line - CCM-4 - Tin exists in earth's crust as sno - 250 words homework (within 24 hours): Budgeting Concepts and Process - English W2 - Sexual Tolerance - Collaborative consultation models used in schools - Management Concepts Week 9 Assignment 3 - Jollibee sydney - How to make y splice joint - Environmental Influences on Gene Activity - Week 2 capstone - Week 7 - Agenda Comparison Grid and Fact Sheet or Talking Points Brief - Statistics needed in 30 mins quiz multiple choice - Engineering mechanics statics in si units - Asian paints financial statements - Colecalciferol 20 000unit capsules - ________________ is a major world religion that is neither monotheistic nor polytheistic. - The name hannah means - Molar heat of combustion of ethanol experiment - Mini Report - Grade boundaries for a level psychology - Letterhead and Memo Template - City of monroe continuous problem solution - The power of five john c maxwell - Colonial adventure tours case answers chapter 3 - Australian safeway stores v zaluzna - A classic experiment by psychologist george sperling demonstrated that - Most blended families report being happy - Case Study (500 words) - Paper - Julius caesar no fear shakespeare act 2 - Eley v positive government - Power angle characteristics of synchronous generator - An example of channel stuffing would be - Phonetool https inside amazon com en pages default aspx - Bicycle wheel moment of inertia - Assignment 1 network infrastructure design diagramming - Ppat task 2 - Sweet box caroline springs - SELECTION PROCESS - Audio Visual Presentation: - Where to Buy letterman jackets? - Discussion 5B - Using your knowledge exercise 17 answers - Balance sheet ratio analysis worksheet - Carbide ion lewis structure - Corinthian surgery repeat prescriptions cheltenham - Www.lk-case/pages/case4you - Leadership traits of martin luther king jr - External penetration testing plan - A guide to taking a patient's history - Panera bread case study financial analysis - There will come soft rains powerpoint - Kitchen equipment word search - Macro political risk events examples - Interpreting skewness and kurtosis in spss - Scholarly Journal Database Search - Pentair easy touch wiring - IP 4 - Indra nooyi leadership style ppt - Michael moore is an idiot - Thai health promotion foundation smoking kid - Food chains and webs answer key - Practical scrap metal small arms vol 5 - T - What size battens for plasterboard ceiling - Larned corporation recorded the following transactions for the just completed month. - Elementary Statistics Quiz - Nfpa 70e training powerpoint - Formula unit mass of al2 co3 3 - ACTIVE DIRECTORY RECOMMENDATIONS - What is an annotation - Badminton racquet string tension - Fetch decode execute cycle steps - For anyone - Senge p 1990 the fifth discipline - Case analysis - Discussion for human Sexuality class - William shakespeare internet scavenger hunt answer key - Why did kfc changed its name - Equivalence class partitioning testing example - Family guy satire examples - Takeexamsonlinetakeexamsonline - International business mcgraw hill 13th edition - Julie bowen eating disorder - Cloud Computing Week 7 Assignment