Number 3
PJ 3 Discussion
1. Discuss the concepts that were most challenging for you in the readings and review material.
How did the practice exercises help clarify these?
2. What did you learn that will help you analyze LGI's cost structure to increase its productivity and put the company on a path to a sustainable future?
PLEASE FIX THE ANSWRS BECAUSE THE EXCEL WORDBOOK IS DIFFERENT FROM THE FIRST ONE. CHECK IT PLEASE AND FOLLOW AND CHECK THE EVALUATION CRITERIA (BELOW) IN ORDER FOR ME TO PASS WITH THE CORRECT ANSWERS
Project 3 Questions – Report Template
Instructions: Answer the five questions below. They focus entirely on improving the EBITDA of Largo Global Inc. (LGI) based on the information provided in the Excel workbook. Provide support for your reasoning from the readings in Project 3, Step 1, and the discussion in Project 3, Step 3. Be sure to cite your sources in APA 7th ed. style.
Provide a detailed response below each question. Use 12-point font and double spacing. Maintain the existing margins in this document. Your final Word document, including the questions, should not exceed 5 pages. Include a title page in addition to the five pages. Any tables and graphs you choose to include are excluded from the five-page limit. Name your document as follows: P3_Final_lastname_Report_date.
You must address all five questions and make full use of the information on all tabs.
You are strongly encouraged to exceed the requirements by refining your analysis. Consider other tools and techniques that were discussed in the required and recommended reading for Project 3. This means adding an in-depth explanation of what happened in the year for which data was provided to make precise recommendations to LGI.
Check Your Evaluation Criteria
Before you submit your assignment, review the competencies below, which your instructor will use to evaluate your work. A good practice would be to use each competency as a self-check to confirm you have incorporated all of them. To view the complete grading rubric, click My Tools, select Assignments from the drop-down menu, and then click the project title.
· 3.1: Identify numerical or mathematical information that is relevant in a problem or situation.
· 3.2: Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.
· 3.3: Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.
· 10.3: Determine optimal financial decisions in pursuit of an organization's goals.
· 10.5: Develop operating forecasts and budgets and apply managerial accounting techniques to support strategic decisions.
Title Page
Name
Course and section number
Faculty name
Submission date
1. How much of the costs were allocated between the standard and deluxe models of the product? Is the marketing manager correct that LGI is making significant margins on the Deluxe Loot Box? Please elaborate on your answer and include evidence from Tab 1 of the Excel workbook.
The standard costs for the product are 15.93 while the deluxe loot box is $21.54. the marketing manager is making significant margins on the deluxe loot box as the profit margin is highest for the Deluxe Loot Box.
2. The IT manager indicated that splitting the costs, as you have done in the calculations performed in Tab 2, does nothing to improve the bottom line. She said: "The amounts are relatively small and as it all comes from the same pot in the end, there is no need to split the costs, it just creates additional coding categories for the system." Explain why the calculation performed in Tab 2 is important. In your discussions, also indicate the benefit of accurate costing when trying to improve profit margins.
Splitting costs will enable the organization assess the costs and profits per products. It will aid the organization comprehend each product and assist in strategic decision making.
3. Based on the calculations in Tab 3 using ABC, comment on the profits made for each product type. Explain in your report why this has changed under ABC costing. Also indicate which one of the two systems; that is, historical cost or ABC, provides the best answers for decision making to improve cost management to improve EBITDA.
In this methodology, the standard loot box was positive whereas the deluxe loot box is negative 35%. The costs have changed as the apportioning is different. The historical method is preferred as it expounds the costs.
4. The marketing manager suggested that to improve EBITDA and increase sales volume, the Deluxe Loot Box should be sold at the same margin as the Standard Loot Box. Base your answers on the ABC calculations performed in Tab 3 to indicate how much Largo will need to charge for the Deluxe Loot Box. Indicate how many Deluxe Loot Boxes the company will have to sell at the new price to break even. Discuss whether changing the price is a viable option for Largo. Provide evidence from the Excel workbook, Tab 4.
The break-even point will be 92 units.
5. If Largo Global Inc. is unable to sell the Deluxe Loot Box for more than $27.86, discuss possible alternatives. Doing the same thing LGI is already doing is not an option; you must suggest how to improve EBITDA.
Discuss the facts that should be considered in determining whether manufacturing the Loot Boxes in-house could lead to a price reduction. No calculations are required for Question 5
Deluxe can opt for removing the product from the market. They can also think of increasing the standard product.