***Dr.Vickline**Only
ladydiva879
acctwk.xlsxSheet 1
| Profit Under Current production level of 550,000 level of production | Monthly capacity in units | 550,000 | ||||||||
| Revenue | $ 33,000,000 | Variable manufacturing cost/unit | $ 26 | |||||||
| Variable costs | Fixed manufacturing cost | $ 3,300,000 | $ 6 | |||||||
| Manufacturing | $ 14,300,000 | Variable Selling cost | $ 10 | |||||||
| Variable selling costs | $ 5,500,000 | Fixed selling cost | $ 3,850,000 | $ 7 | ||||||
| Contribution Margin | $ 13,200,000 | |||||||||
| Fixed manufacturing & Selling costs | $ 7,150,000 | Selling price | $ 60 | |||||||
| Profits | $ 6,050,000 | New Customer's selling price | $ 35 | |||||||
| Additional units produced | 60,000 | |||||||||
| Total units | 610,000 | |||||||||
| Profit With new customer considerations | ||||||||||
| Revenue | $ 35,100,000 | |||||||||
| Variable costs | ||||||||||
| Manufacturing | $ 15,860,000 | |||||||||
| Variable selling costs | $ 5,500,000 | |||||||||
| Contribution Margin | $ 13,740,000 | |||||||||
| Fixed manufacturing & Selling costs | $ 7,930,000 | |||||||||
| Profits | $ 5,810,000 | |||||||||
| No, the company should not accept the new offer | ||||||||||
| The net profits decreases after additional consideration | ||||||||||
| The company earns | $ (240,000) | |||||||||
| This is a loss to the company |
Sheet2
| Profit Under Current production level of 480,000 level of production | Monthly capacity in units | 480,000 | ||||||||
| Revenue | $ 20,640,000 | Variable manufacturing cost/unit | $ 21 | |||||||
| Variable costs | Fixed manufacturing cost | $ 1,920,000 | 4 | |||||||
| Manufacturing | $ 10,080,000 | Variable Selling cost | $ 5 | |||||||
| Variable selling costs | $ 2,400,000 | Fixed selling cost | $ 1,440,000 | 3 | ||||||
| Contribution Margin | $ 8,160,000 | |||||||||
| Fixed manufacturing & Selling costs | $ 3,360,000 | Selling price | $ 43 | |||||||
| Profits | $ 4,800,000 | New Customer's selling price | $ 36 | |||||||
| Additional units produced | 50,000 | |||||||||
| Total units | 530000 | |||||||||
| Profit With new customer considerations | ||||||||||
| Revenue | $ 22,440,000 | |||||||||
| Variable costs | ||||||||||
| Manufacturing | $ 11,130,000 | |||||||||
| Variable selling costs | $ 2,400,000 | |||||||||
| Contribution Margin | $ 8,910,000 | |||||||||
| Fixed manufacturing & Selling costs | $ 3,710,000 | |||||||||
| Profits | $ 5,200,000 | |||||||||
| Yes, the company should accept the new customer deal | ||||||||||
| The deal increases the company profits | ||||||||||
| The increase is, | $ 400,000 |
Sheet 3
| Current situation | Extensive report situation | Incremental analysis | ||||||||
| Report revenue | $ 500,000 | Report revenue | $ 750,000 | Revenues | $ 250,000 | |||||
| Report costs incured | $ 350,000 | Report costs incured | $ 600,000 | Costs | $ 250,000 | |||||
| $ - 0 | ||||||||||
| Net revenue | $ 150,000 | Net revenue | $ 150,000 | Net revenue | $ - 0 | |||||
| The company is indifferent of doing extensive report. | ||||||||||
| The extensive report does not result into profits or losses. | ||||||||||
| The management should just accept because no additional charges are incured. | ||||||||||
| Net change is zero. |
Sheet4
| Client type | Job | Wholesale | Retail | |||
| Revenue per client | $ 1,700 | $ 3,800 | $ 5,300 | |||
| Variable cost per client | $ 800 | $ 1,400 | $ 2,700 | |||
| Specialized labor required per client | 5 | 14 | 15 | |||
| Maximum clients available | 200 | 400 | 600 | |||
| Step 1. | ||||||
| Contribution margin per unit | ||||||
| Client type | Job | Wholesale | Retail | Total | ||
| Revenue per client | $ 1,700 | $ 3,800 | $ 5,300 | $ 10,800 | ||
| Variable cost per client | $ 800 | $ 1,400 | $ 2,700 | $ 4,900 | ||
| Contribution Margin | $ 900 | $ 2,400 | $ 2,600 | $ 5,900 | ||
| Step 2. Benefit Ranks | ||||||
| Going by Contribution per unit, Retail goes for rank 1, wholesale rank 2 and Job rank 3. | ||||||
| 1 | Therefore, crhonology of how clients should be served. | |||||
| Retail | 1 | |||||
| Wholesale | 2 | |||||
| Job | 3 | |||||
| 2 | Number of special labor | |||||
| The number will depend on rankings | ||||||
| Total hours available | 15000 | |||||
| Hours | Maximum clients | |||||
| Retail | 15 | 600 | 9000 | |||
| Wholesale | 14 | 400 | 5600 | |||
| Remainder | 400 | |||||
| Job | 400/6hrs= | 66.6666666667 | ||||
| Therefore, 66 clients in Job | ||||||
| Number of Hours | ||||||
| Retail 9,000 hours | ||||||
| Wholesale 5,600 hours | ||||||
| Job 400 hours | ||||||
| Number of clients | ||||||
| Retail 600 clients | ||||||
| Wholesale 400 clients | ||||||
| Job 66 clients | ||||||
| Contribution Margin | ||||||
| Client type | Job | Wholesale | Retail | Total | ||
| Revenue | $ 112,200 | $ 1,520,000 | $ 3,180,000 | $ 4,812,200 | ||
| Variable | $ 52,800 | $ 560,000 | $ 1,620,000 | $ 2,232,800 | ||
| Contribution margin | $ 59,400 | $ 960,000 | $ 1,560,000 | $ 2,579,400 |
