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Question 1( 30 marks) a- There appears to be a growing tendency for companies to seek competitive advantage by applying customer focused strategies. This customer
Question 1( 30 marks) a- There appears to be a growing tendency for companies to seek competitive advantage by applying customer focused strategies. This customer focus is evident from a number of companies including customer orientation in their corporate mission statement. 1-Explain the concept of customer profitability analysis. Give examples of cost drivers used in this analysis 2-How does the life time analysis differ from the basic customer profitability approach? Explain 3-Show reasons why might an organization choose to keep an apparently unprofitable customer. 4- Should the company in its customer profitability analysis use activity based costing approach or traditional product and service costing approaches. Explain the reason behind your answer. (20 marks) b- Provide brief information about the IMA(Institute Of Management Accountants) , its history , mission , vision , core values , conditions for membership etc.( not more than 200 words) ( 10 marks) Question 2 ( 30 marks) a. Amira, the owner of a music equipment shop wanted to have a sales budget for the next three months. She asked her assistant Dina to do the job. After consulting with friends in the same business, Dina estimated February revenues to be $30,000. She expects revenues to increase by $3,000 per month in March and April. Dina also expects that 60% of sales to be cash and 40% of sales to be on credit. Sales on credit are expected to be collected as follows: 30% in the month of sale and 70% in the month following the sales. Required: Based on the above information, calculate the expected cash collection for the month of April Question 3 ( 40 marks) Newtel Inc. manufactures Cell phones. Last year Newtel sold 30,000 phones at $80 each. Total costs amounted to $1,800,000 of which $600,000 were considered fixed. In an attempt to improve its product, the company is considering replacing a component part that has a cost of $16 with a new and better part costing $26 per unit in the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $100,000 with a useful life of five years and a $20,000 salvage value. The company uses straight-line depreciation on all plant assets. (Ignore company tax.) Required: 1. Calculate in units, Innovation's break-even point for last year. ( 10 marks) 2. Calculate the number of units that the company would have had to sell in the last year to earn $ 200,000. Prove your answer.( 10 marks) 3. If Newtel increases the selling price by $20, and purchases the new part and the new machine, calculate the new contribution margin , the new fixed cost & the number of units that the company will have to sell to make the same net income as last year. ( 20 marks) Note*** please write all questions with references
Question 1( 30 marks)
a- There appears to be a growing tendency for companies to seek competitive advantage by applying customer focused strategies. This customer focus is evident from a number of companies including customer orientation in their corporate mission statement.
1-Explain the concept of customer profitability analysis. Give examples of cost drivers used in this analysis
2-How does the life time analysis differ from the basic customer profitability approach? Explain
3-Show reasons why might an organization choose to keep an apparently unprofitable customer.
4- Should the company in its customer profitability analysis use activity based costing approach or traditional product and service costing approaches. Explain the reason behind your answer.
(20 marks)
b- Provide brief information about the IMA(Institute Of Management Accountants) , its history , mission , vision , core values , conditions for membership etc.( not more than 200 words) ( 10 marks)
Question 2 ( 30 marks)
a. Amira, the owner of a music equipment shop wanted to have a sales budget for the next three months. She asked her assistant Dina to do the job. After consulting with friends in the same business, Dina estimated February revenues to be $30,000. She expects revenues to increase by $3,000 per month in March and April. Dina also expects that 60% of sales to be cash and 40% of sales to be on credit. Sales on credit are expected to be collected as follows: 30% in the month of sale and 70% in the month following the sales.
Required:
Based on the above information, calculate the expected cash collection for the month of April
Question 3 ( 40 marks)
Newtel Inc. manufactures Cell phones. Last year Newtel sold 30,000 phones at $80 each. Total costs amounted to $1,800,000 of which $600,000 were considered fixed.
In an attempt to improve its product, the company is considering replacing a component part that has a cost of $16 with a new and better part costing $26 per unit in the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $100,000 with a useful life of five years and a $20,000 salvage value. The company uses straight-line depreciation on all plant assets. (Ignore company tax.)
Required:
1. Calculate in units, Innovation's break-even point for last year. ( 10 marks)
2. Calculate the number of units that the company would have had to sell in the last year to earn $ 200,000. Prove your answer.( 10 marks)
3. If Newtel increases the selling price by $20, and purchases the new part and the new machine, calculate the new contribution margin , the new fixed cost & the number of units that the company will have to sell to make the same net income as last year. ( 20 marks)
Note*** please write all questions with references
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