When Trixie started to analyse the financial information of Machiq Limited (see previous case studies) following Esmeraldas
Question:
When Trixie started to analyse the financial information of Machiq Limited (see previous case studies) following Esmeralda’s takeover bid, she realised that although the company as a whole appeared profitable, no one had looked at the financial information from a management accountant’s viewpoint. In particular, there had been no attempt to consider the nature of the costs incurred and how they may have affected the relative profitability of the two main divisions of the business: Performing and Retailing. After some research, Trixie produced the following analysis:
Machiq Limited: year ended 30 June 2016
£ Notes Revenue 705,600 30% Performing, 70% Retailing Cost of sales (529,200) 80% of costs are variable, divided 10% Performing, 90% Retailing Gross profit 176,400 Expenses (58,600) Overall 60% fixed, 40% variable, with 35% of the total relating to Performing, the rest to Retailing Operating profit for the year, before taxation 117,800 Required Redraw the analysis to show the relevant operating profit or loss for each division.
Step by Step Answer:
Accounting And Finance For Business
ISBN: 9780273773948
1st Edition
Authors: Geoff Black, Mahmoud Al-Kilani