MODULE 3:
Profit decisions are important to the Martins. These decisions not only arise from understanding the market, pricing policies and margins the managers need to understand the tools and elements they need to consider as they target either profit levels or their ability to manage the elements of the profit calculation. For example, if CompuTech is operating at a loss or below BREAK EVEN then understanding how they might be able to manage costs, or volumes to generate profits becomes very important. BREAKEVEN analysis can help the Martins and CompuTech decide on any of the following: how many units they need to sell, what price should they sell at (and compared to what the market will bear), what levels their fixed costs are at, what product or service should a company promote more or less.
Assuming the following: (i) the sales price for each CompuTech product sold is $50; (ii) each product sold costs $25 in Raw Material components; and the business Fixed Cost is as determined in your Income Statement.
Q1: What is the BE in units for CompuTech in 2021?
Q2: What impact would occur to the BE if the variable cost of materials rose by 10% during the year?
Q3: If the overall market for computer products in CompuTechs market area is 3,000 units what share of the market does its BE (Q1) represent? What share of the market does CompuTechs unit sales in 2021 represent?
Q4: If CompuTech were to hire a Sheridan student (annual cost for Part Time service $20,000 per year) to help in the marketing of CompuTech, what would the impact be on the companys BE?
Q5: If the Sheridan student could impact unit sales by 20% growth, would their hiring be justified? Explain.
Q6: With the following information for 2022 prepare a pro-forma Income Statement for the year ending December 31, 2022, and then, calculate CompuTechs (a) income before taxes, (b) contribution margin and (c) PV ratio.
RM Purchases: $205,000
Freight In: 4,000
Sales Salaries: 60,000
Commissions: 3,000
Travel: 3,000
Advertising: 5,000
Admin Salaries: 38,000
Revenue: 420,000
Depreciation: 40,000
Office leasing: 7,000
Finance Costs: 14,000
Income Taxes: 13,000
Q7: Assuming that the price per unit and the variable cost per unit have stayed the same as in calculations for 2021, what is the new BE in units for CompuTech in 2022? How does this compare to the BE in units for the previous year?
Q8: If the total market in the CompuTech market area had experienced a shrinking in units during the year (of 10%) should the Martins be concerned? Explain.
By 2023 the Martins are projecting considerable improvement in their business. Using the following accounts prepare the Income Statement for the period ending December 31, 2022.
RM Purchases: $406,000
Sales Salaries: 80,000
Commissions: 5,000
Travel: 5,000
Advertising: 10,000
Depreciation: 80,000
Admin Salaries: 60,000
Office Leasing: 10,000
Finance Costs: 30,000
Income Taxes: 42,000
Q9: In a single EXCEL file complete a file displaying the three Income Statements that you have completed so far. Leave two blank columns between each year so that later we can do account changes between years.
Admin 2.CO 470.000 MODULE 3 Profit decisions are portant to the Martins. These dechiomonly are from understanding the market pricing policies and was the managers need to understand the tools and dements they need to come as they target the profile or the ability to manage the elements of the politikation. For comple, if CompuTechnoperating of below REAR EVEN than understanding how they will be able to manage costs, or volumes to generate profit becomes very important. BREAKIVIN nalysis can help the Martian CompuTech decide on any of the following how they need to w what price should they eat and compared to what the market will be what the feed costs west, what product or service should company promote more or less Asuming the following the price for each computech product sold is such product old costs $25 in Raw Material components and the besede determined in your come Statement ut: what the inits for complech in 2017 02: What impact would one to their the variable cost of material rose by 10 dong if the overall market for computer products in Computers market antar 2.000 What share oferta de represent? What share of the market does Computer's tes in 2021 represent? o Complech were there a Sheridan student al cost for Part Time service $20.000 per years to be the marketing of computed, what would the impact company's if the Shendan student could act as by 200 growth, would their wing Explan 06 with owing information for 2002 prepare a proforma income talent for the pweding December 31, 2012, ardente complect's come before the contribution and Pb. HM Purchases $20.000 4000 Sales Sales 60.000 Depreciation 0000 Office 7.000 Tinance costs 14.000 Income Tanes 11,000 an Aung that the priceperunt and the abile con perunt have stayed the same inctions for 2001, what is the news for computech in 22 How does this compare to the in units for the previous year? RE the total market at the Complech market readers during the year of shed the Martins become explain ty 2003 the Martins are projecting considerate mprovement is the best following prepare the come Statement for the periodening December 2002 AM Purchases S000 Sales Sales 30,000 Commons 5.000 Travel 5.000 Deprecato 80.000 Adnan Sa 60.000 Ofig 10.000 Fine 10.000 comes 42.000 hange EXCEL play the treatment that you have completed so www ambitwach year so that we can do court changes beta 1 coin 3.000 Tv 1.000 5.000 Font Paragraph MODULE 3: Profit decisions are important to the Martins. These decisions not only arise from understanding the market, pricing policies and margins the managers need to understand the tools and elements they need to consider as they target either profit levels or their ability to manage the elements of the profit calculation. For example, if CompuTech is operating at a loss or below BREAK EVEN then understanding how they might be able to manage costs, or volumes to generate profits becomes very important. BREAKEVEN analysis can help the Martins and CompuTech decide on any of the following: how many units they need to sell, what price should they sell at (and compared to what the market will bear), what levels their fixed costs are at, what product or service should a company promote more or less. Assuming the following: (1) the sales price for each compuTech product sold is $50; (11) each product sold costs $25 in Raw Material components, and the business Fored Cost is as determined in your Income Statement. Q1: What is the BE in units for CompuTech in 2021? Q2: What impact would occur to the BE if the variable cost of materials rose by 10% during the year? Q3: If the overall market for computer products in CompuTech's market area is 3,000 units what share of the market does its BE (01) represent? What share of the market does CompuTech's unit sales in 2021 represent? 04: of Computech were to hire a Sheridan student (annual cost for Part Time service $20,000 per year) to help in the marketing of CompuTech, what would the impact be on the company's BE? 05: If the Sheridan student could impact unit sales by 20% growth, would their hiring be justified? Explain Q6: with the following information for 2022 prepare a pro-forma Income Statement for the year ending December 31, 2022, and then calculate CompuTech's (a) income before taxes, (b) contribution margin and (c) PV ratio. RM Purchases: $205,000 Freight in: 4,000 Sales Salaries: 60,000 Commissions: 3,000 Travel 3,000 Advertising: 5,000 English Canada nything ot ASUS VI Admin Salaries: 38,000 Revenue: 420,000 Depreciation: 40,000 Office leasing 7,000 Finance Costs: 14,000 Income Taxes: 13,000 07: Assuming that the price per unit and the variable cost per unit have stayed the same as in calculations for 2021, what is the new BE in units for CompuTech in 2022? How does this compare to the BE in units for the previous year? Q8: of the total market in the CompuTech market area had experienced a shrinking in units during the year (of 10%) should the Martins be concerned? Explain. By 2023 the Martins are projecting considerable improvement in their business. Using the following accounts prepare the income Statement for the period ending December 31, 2022. RM Purchases: $406,000 Sales Salaries: 80,000 Commissions: 5,000 Travel: 5,000 Advertising: 10,000 Depreciation: 80,000 Admin Salaries: 60,000 Office Leasing: 10,000 Finance Costs: 30,000 Income Taxes: 42,000 09: In a single EXCEL file complete a file displaying the three Income Statements that you have completed so far. Leave two blank columns between each year so that later we can do account changes between years. I Focus N VivoBook Admin 2.CO 470.000 MODULE 3 Profit decisions are portant to the Martins. These dechiomonly are from understanding the market pricing policies and was the managers need to understand the tools and dements they need to come as they target the profile or the ability to manage the elements of the politikation. For comple, if CompuTechnoperating of below REAR EVEN than understanding how they will be able to manage costs, or volumes to generate profit becomes very important. BREAKIVIN nalysis can help the Martian CompuTech decide on any of the following how they need to w what price should they eat and compared to what the market will be what the feed costs west, what product or service should company promote more or less Asuming the following the price for each computech product sold is such product old costs $25 in Raw Material components and the besede determined in your come Statement ut: what the inits for complech in 2017 02: What impact would one to their the variable cost of material rose by 10 dong if the overall market for computer products in Computers market antar 2.000 What share oferta de represent? What share of the market does Computer's tes in 2021 represent? o Complech were there a Sheridan student al cost for Part Time service $20.000 per years to be the marketing of computed, what would the impact company's if the Shendan student could act as by 200 growth, would their wing Explan 06 with owing information for 2002 prepare a proforma income talent for the pweding December 31, 2012, ardente complect's come before the contribution and Pb. HM Purchases $20.000 4000 Sales Sales 60.000 Depreciation 0000 Office 7.000 Tinance costs 14.000 Income Tanes 11,000 an Aung that the priceperunt and the abile con perunt have stayed the same inctions for 2001, what is the news for computech in 22 How does this compare to the in units for the previous year? RE the total market at the Complech market readers during the year of shed the Martins become explain ty 2003 the Martins are projecting considerate mprovement is the best following prepare the come Statement for the periodening December 2002 AM Purchases S000 Sales Sales 30,000 Commons 5.000 Travel 5.000 Deprecato 80.000 Adnan Sa 60.000 Ofig 10.000 Fine 10.000 comes 42.000 hange EXCEL play the treatment that you have completed so www ambitwach year so that we can do court changes beta 1 coin 3.000 Tv 1.000 5.000 Font Paragraph MODULE 3: Profit decisions are important to the Martins. These decisions not only arise from understanding the market, pricing policies and margins the managers need to understand the tools and elements they need to consider as they target either profit levels or their ability to manage the elements of the profit calculation. For example, if CompuTech is operating at a loss or below BREAK EVEN then understanding how they might be able to manage costs, or volumes to generate profits becomes very important. BREAKEVEN analysis can help the Martins and CompuTech decide on any of the following: how many units they need to sell, what price should they sell at (and compared to what the market will bear), what levels their fixed costs are at, what product or service should a company promote more or less. Assuming the following: (1) the sales price for each compuTech product sold is $50; (11) each product sold costs $25 in Raw Material components, and the business Fored Cost is as determined in your Income Statement. Q1: What is the BE in units for CompuTech in 2021? Q2: What impact would occur to the BE if the variable cost of materials rose by 10% during the year? Q3: If the overall market for computer products in CompuTech's market area is 3,000 units what share of the market does its BE (01) represent? What share of the market does CompuTech's unit sales in 2021 represent? 04: of Computech were to hire a Sheridan student (annual cost for Part Time service $20,000 per year) to help in the marketing of CompuTech, what would the impact be on the company's BE? 05: If the Sheridan student could impact unit sales by 20% growth, would their hiring be justified? Explain Q6: with the following information for 2022 prepare a pro-forma Income Statement for the year ending December 31, 2022, and then calculate CompuTech's (a) income before taxes, (b) contribution margin and (c) PV ratio. RM Purchases: $205,000 Freight in: 4,000 Sales Salaries: 60,000 Commissions: 3,000 Travel 3,000 Advertising: 5,000 English Canada nything ot ASUS VI Admin Salaries: 38,000 Revenue: 420,000 Depreciation: 40,000 Office leasing 7,000 Finance Costs: 14,000 Income Taxes: 13,000 07: Assuming that the price per unit and the variable cost per unit have stayed the same as in calculations for 2021, what is the new BE in units for CompuTech in 2022? How does this compare to the BE in units for the previous year? Q8: of the total market in the CompuTech market area had experienced a shrinking in units during the year (of 10%) should the Martins be concerned? Explain. By 2023 the Martins are projecting considerable improvement in their business. Using the following accounts prepare the income Statement for the period ending December 31, 2022. RM Purchases: $406,000 Sales Salaries: 80,000 Commissions: 5,000 Travel: 5,000 Advertising: 10,000 Depreciation: 80,000 Admin Salaries: 60,000 Office Leasing: 10,000 Finance Costs: 30,000 Income Taxes: 42,000 09: In a single EXCEL file complete a file displaying the three Income Statements that you have completed so far. Leave two blank columns between each year so that later we can do account changes between years. I Focus N VivoBook
