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Can anyone help me ACCT203? I just attached the problem for acct 203. ACCOUNTING 203 EXAM #2 (CHS.5,6,7) TEAM CASE/PROBLEM 60 PTS. DUE DATE: Thursday,

Can anyone help me ACCT203?

I just attached the problem for acct 203.

image text in transcribed ACCOUNTING 203 EXAM #2 (CHS.5,6,7) TEAM CASE/PROBLEM 60 PTS. DUE DATE: Thursday, February 16 NAMES: PART ONE: 15 PTS. Based in Italy, Datura, Ltd., in an international importer-exporter of pottery with distribution centers in the United States, Europe, and Australia. The company was very successful in its early years, but its profitability has since declined. As a member of a management team selected to gather information for Datura's next strategic planning meeting, you have been asked to review its most recent contribution margin income statement for the year ended December 31, 2016, which follows: Datura, Ltd. Contribution Margin Income Statement For the year Ended December 31, 2016 Sales Revenue* Less variable costs: Purchases Distribution Sales commissions Total variable costs Contribution margin Less fixed costs: Distribution Selling General and Admin. Total fixed costs Operating Income $13,500,000 6,000,000 2,115,000 1,410,000 9,525,000 $ 3,975,000 985,000 1,184,000 871,875 *In 2016, Datura sold 15,000 sets of pottery. REQUIRED: For each set of pottery sold in 2016, calculate the: Selling Price per unit Variable Purchases cost per unit Variable Distribution cost per unit 3,040,875 934,125 Variable Sales Commission per unit Contribution Margin per unit Calculate the break-even point in units and in sales dollars. Historically, Datura's variable costs have been about 60 percent of sales. What was the ratio of variable costs to sales in 2016 (round to two decimal places)? PART TWO: 10 PTS. Refer to the information in Part One. In January 2017, the president of Datura, Ltd., conducted a strategic planning meeting. During the meeting, the vice president of distribution noted that because of a new contract with an international shipping line, the company's fixed distribution costs for 2017 would be reduced 10 percent and its variable distribution cost per unit by 4 percent. The vice president of sales offered the following information: We plan to sell 15,000 sets of pottery again in 2017, but based on review of the competition, we are going to lower the selling price to $890 per set. To encourage increased sales, we will raise sales commissions to 12 percent of the selling price. The president is concerned that the changes described by the vice presidents may not improve operating income sufficiently in 2017. If operating income does not increase by at least 10 percent, she will want to find other ways to reduce the company's costs. She asks you to evaluate the situation by preparing a report. REQUIRED: Prepare a budgeted contribution margin income statement for 2017. Your report should show the budgeted (estimated) operating income based on the information presented in Part One and Part two. Will the changes improve operating income sufficiently? Explain? PART THREE: 15 PTS. As noted in Parts One and Two, Datura Ltd., sold 15,000 sets of pottery in 2016. For the next year, 2017, Datura's strategic planning team targeted sales of 15,000 sets of pottery, reduced the selling price to $890 per set, increased sales commissions to 12 percent of the selling price, and decreased fixed distribution costs by 10 percent and variable distribution cost per unit by 4 percent. It was assumed that all other costs would stay the same. Based on the analysis of these changes, Datura's president is concerned that the proposed strategic plan will not meet her goal of increasing Datura's operating income by 10 percent over last year's income and that the operating income will be less than last year's income. She has come to you for a spreadsheet analysis of the proposed strategic plan and for the analysis of a special order she just received from an Australian distributor for 4,500 sets of pottery. The order's selling price, variable purchases cost per unit and sales commission will be the same as the rest of the business, but the variable distribution costs will be $160 per unit. Total fixed costs will be unaffected by the special order. REQUIRED: Calculate the total contribution margin from the Australian Sales. Prepare a revised budgeted contribution margin income statement for 2017 that includes the Australian order. Does Datura need the Australian sales to achieve its targeted operating income for 2017? Explain? TEAM PARTICIPATION POINTS: 20 PTS

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