29 Jun Question Week 1 discussion Cost Terms, Classifications, and Behavior (graded
Question
Week 1 discussion
Cost Terms, Classifications, and Behavior (graded)
Welcome to our Week 1 Discussions! To get us started, let’s consider the following questions.
1) Would a traditional income statement differ depending on whether the business is a service organization, merchandiser, or manufacturer?
2) Could we use managerial accounting tools to assess the profitability of an organization other than a manufacturing business, or are the topics that we are learning only related to manufacturing?
3) If we could use these concepts in service and/or merchandising businesses, how would we go about doing so?
Let’s start with the first question.
Research and Application (graded)
Go to page 130, Case 3-30, Ethics and the Manager. Let’s discuss the questions, make value-added comments, points, and share personal experiences of unethical situations.
Week 2 discussion
Job Order and Process Costing Systems (graded)
Welcome to our Week 2 Discussions! Let’s begin by discussing when job order costing systems would be more appropriate than a process costing system.
Research and Application (graded)
Go to page 166 and read Case 4-19, Ethics and the Manager: Understanding the Impact of Percentage Completion on Profit. Let’s address the questions, provide reasons for our answers, share relevant personal experiences, and provide value-added comments, articles, and related websites. Let’s have a lot of interaction.
Week 3 discussion
Variable Costing and CVP concepts (graded)
Welcome to our Week 3 Discussions! To get us started, let’s discuss how CVP analysis is used in managerial accounting decision-making.
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Research and Application (graded)
Below is the link that will take you directly to the 2004 financial statements of the Benetton Group, followed by the discussion questions.
http://www.benettongroup.com/sites/all/temp/doc/2004_annual_report_en.pdf
Let’s answer these questions in the order that they appear.
1. How do the formats of the income statements shown on pages 33 and 50 of Benetton’s annual report differ from one another (disregard everything beneath the line titled “income from operations”)? Which expenses shown on page 50 appear to have been reclassified as variable selling costs on page 33?
2. Why do you think cost of sales is included in the computation of contribution margin on page 33?
3. Perform two separate computations of Benetton’s break-even point in euros. For the first computation, use data from 2003. For the second computation, use data from 2004. Why do the numbers that you computed differ from one another?
4. What sales volume would have been necessary in 2004 for Benetton to attain a target income from operations of €300 million?
5. Compute Benetton’s margin of safety using data from 2003 and 2004. Why do your answers for the two years differ from one another?
6. What is Benetton’s degree of operating leverage in 2004? If Benetton’s sales in 2004 had been 6% higher than what is shown in the annual report, what income from operations would the company have earned? What percentage increase in income from operations does this represent?
7. What income from operations would Benetton have earned in 2004 if it had invested an additional €10 million in advertising and promotions and realized a 3% increase in sales? As an alternative, what income from operations would Benetton have earned if it not only invested an additional ?10 million in advertising and promotions but also raised its sales commission rate to 6% of sales, thereby generating a 5% increase in sales? Which of these two scenarios would have been preferable for Benetton?
8. Assume that total sales in 2004 remained unchanged at, €1,686 million (as shown on pages 33 and 50); however, the Casual sector sales were, €1,504 million, the Sportswear and Equipment sector sales were €75 million, and the Manufacturing and Other sector sales were €107 million. What income from operations would Benetton have earned with this sales mix? (Hint: look at pages 36 and 37 of the annual re
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