I'm stuck with this part of the case study:
- Prepare a memo to the Chief Financial Officer summarizing the results of your analysis and your recommendation for the best plan for the company. Include specific financial information from your analysis. Also include any non-financial information that was part of your decision making process.
This is what I have so far from the case study:
1) Contribution format Income Statement for 2) Contribution format Income Statement for Particulars Sales(648000 Units) Less: varible Cost Direct labour(648000*9) Direct Material( 648000+5.4490%) Manufacturing Overhead(648000 3.24 Variable Selling Expense 648000 1.8) Cost per unit 36 Sales(600000 Units) Less: varible Cost Direct labour Direct Material Manufacturing Overhead Variable Selling Expense 21,600,000 5.4 3.24 1.8 1080000 (11,661,000) 1166100-12247200 Contribution Less: Fixed cost Manufacturing Overhead Fixed Selling Expense Fixed Administrative Expense Contribution Less: Fixed cost Manufacturing Overhead Fixed Selling Expense Fixed Administrative Expense 10,108,800 800 2400000 12.04 2,136,000 2,308,800 Calculaton of Break even sales Calculaton of Break even sales Contribution margin Contribution/Sales 100 Contribution margin 10,108,800/22,356,000-100-45.21% Break even polnt Flxed Cost/ contribution margin Break even point Flxed Cost Contribution margin 7,800,000/46%-$16,956,521.74 7,800,000/45.21%-$11,250,000 Break Even units Breakeven salesf sales price per unit 16,956,521.74/36 471014 units Break Even units Breakeven sales/ sales price per unit 17,250,000/34.5 500000 units 3) Contribution format Income Statement or year 2017 Particulars 4) Contribution format Income Statement for year 2017 Particulars Sales(66000o u Less: varible Cost Direct labour(15% of sales) Direct Material(660000*5.4) Manufacturing Overhead(660000 3.24) Variable Selling Expense (606000 Units) 22119000 Less: varible Cost Direct labour(20% of sales) Direct Material(606000*5.4 Manufacturing Overhead(606000 3.24) Variable Selling Expense(606000"1.8 3272400 1963440 2138400 08771400 Contribution Less: Fixed cost Manufacturing Overhead Fixed Selling Expense(1,200,000+120,000) Additional fixed cost Fixed Administrative Expense Contribution Less: Fixed cost Manufacturing Overhead(4 Fixed Selling Expense(1,200,000+75000) Additional fixed cost Fixed Administrative Expense 11368560 18.76 1320000 1275000 8520000 4.06 7925000 Net operating Income 2848560 Net operating Income 3/63600 Calculaton of Break even sales Calculaton of Break even sales Contribution margin Contribution/Sales 100 11,368,560/22, 119,000+100-51.39% Break even point Fixed Cost/ Contribution margin Contribution margin Contribution/Sales"100 11,688,600/20,460,000"100-57.13% Break even point Fixed Cost/ Contribution margin 8,520,000/51.39%-$16576759.1 7,925,000/57.13%= $13,872,106.2 Break Even units Breakeven sales/ sales price per unit Break Even units Breakeven sales/ sales price per unit 16,576,759.1/36.5 454158units 13,872,106.2/31 447487units Alternative 4 must of chosen
