MBA 6100 Summer 2017 Block 1 Case Study #1 CVP Analysis JTTM Corporation has been struggling with profitability and has hired you as an outside consultant to analyze the companys financial results from operations and provide recommendations on steps the company can take to become profitable. The following per unit information has been provided to you:

Sales $ 1,100 Variable expenses: Direct labor 198 Direct material 220 Variable manufacturing overhead 132 Variable selling expenses 110 Fixed expenses: Fixed manufacturing overhead 200 Fixed selling expenses 80 Fixed administrative expenses 175 The normal sales volume for JTTM Corporation is 4,000 units. The relevant range for these costs is 3,500 6,000 units. Requirements:

(1) Calculate the break-even unit sales and break-even sales dollars using the formulas demonstrated in the text. Prepare a contribution margin income statement to support your break-even sales dollars.

(2) Calculate the unit sales and the dollar sales to attain the target profit of $500,000 using the formulas demonstrated in the text. Prepare a contribution margin income statement to support your target profit sales volume.

(3) Prepare a contribution margin income statement at the normal sales volume. All variable expenses and fixed expenses must be listed separately on your contribution margin income statement.

(4) The company believes that sales can be increased by 10% if they switch their compensation to a more commission based system. The company believes this change will save $40,000 in fixed selling costs but will cause variable selling expenses to increase to 14%. Prepare a contribution margin income statement reflecting net operating income utilizing these assumptions.

(5) Prepare a professional style memo to the Board of Directors of JTTM Corporation explaining the results of your analysis from requirements (1) (4). Be thorough and use specific numerical information in your memo. In addition, provide any recommendation(s) you may have for the company to make it profitable. Be sure to include any calculations/income statements necessary to support your recommendation(s)

The submission is to be one Excel file. Your Excel file should be titled with your last name & "case study 1."

The problem has 5 parts. Your answers should be clearly marked by part number.

Part 5 is a memo. You should prepare the memo in Word and then cut and paste special (select Microsoft Work Document Object) into your excel worksheet or insert a text box into your worksheet and type your narrative into the text box. Linking a Word document to your Excel worksheet will NOT work.

All calculations are to be shown. This is done by entering your calculation as an Excel formula where applicable.

Do not round your dollar amounts or units but display all dollar amounts to the nearest dollar and all units to the nearest unit.

The memo portion of your case will receive the greatest value in the "Correct Answers" portion of the case study rubric. There is no one correct answer for the memo, however, you should take your time with the memo and provide a well-thought-out memo.