Cost volume profit analysis questions and answers doc

Assignment Content

Purpose of Assignment
The Case Study focuses on CVP (Cost-Volume-Profit), break-even, and margin of safety analyses which allows students to experience working through a business scenario and applying these tools in managerial decision making.

week 5 grading rubric.doc

WATCH THE VIDEO IN THE DISCUSSIONS FOR HELP WITH CALCULATIONS.

Scenario: Jessica Cox is the advertising manager for Specialty Shoes. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,000 in fixed costs to the $270,000 in fixed costs currently spent. In addition, Jessica is proposing a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Jessica's ideas but concerned about the effects these changes will have on the break-even point and the margin of safety.

Assignment Steps

Complete the following:
Compute the current break-even point in units, and compare it to the break-even point in units if Jessica's ideas are used.
Compute the margin of safety ratio for current operations and after Jessica's changes are introduced (Round to nearest full percent).
Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Jessica's changes are introduced.
Prepare a maximum 500-word informal memo to management addressing Jessica's suggested changes.
Explain whether Jessica's changes should be adopted. Why or why not? Analyze the your calculations (three bullet points above) and use this information to support your suggestion.
USE the memo template provided in week 1.

memo template.docx

Show your work in Excel.

Complete calculations/computations using Excel.

Submit a word doc and your excel spreadsheet.

Cost-Volume-Profit Analysis Grading Guide ACC/561 Version 7

3

Cost-Volume-Profit Analysis Grading Guide

ACC/561 Version 7

Accounting

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Individual Assignment: Cost-Volume-Profit Analysis
Purpose of Assignment
The Case Study focuses on CVP (Cost-Volume-Profit), Break-Even, and margin of safety analyses which allows students to experience working through a business scenario and applying these tools in managerial decision making.

Resources Required
Generally Accepted Accounting Principles (GAAP)

U.S. Securities and Exchange Commission (SEC)

Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products.

Grading Guide
Content

Met

Partially Met

Not Met

Comments:

Computed the current break-even point in units, and compared it to the break-even point in units if Jessica’s ideas were used.

Computed the margin of safety ratio for current operations and after Jessica’s changes were introduced (rounded to nearest full percent).

Prepared a CVP (Cost-Volume-Profit) income statement for current operations and after Jessica’s changes were introduced.

Explained whether Jessica’s changes should be adopted. Why or why not? Analyzed the information (first three rows above) and used the information to support student’s suggestion.

Showed work Excel®. Completed calculations/computations

using Excel®.

Total Available

Total Earned

100

#/100

Writing Guidelines

Met

Partially Met

Not Met

Comments:

The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements. Intellectual property is recognized with in-text citations and a reference page.

.

Paragraph and sentence transitions are present, logical, and maintain the flow throughout the paper. Sentences are complete, clear, and concise. Rules of grammar and usage are followed including spelling and punctuation.

The memo is no more than 500 words.

Total Available

Total Earned

30

#/30

Assignment Total

#

130

#/130

Additional comments: