ACC 561 Week 5 Assignment Help | University Of Phoenix
- University of Phoenix / ACC 561
- 18 Oct 2019
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ACC 561 Week 5 Assignment Help | University Of Phoenix
Week 5 –
Cost-Volume-Profit Analysis
Purpose of
Assignment
The Case Study focuses
on CVP (Cost-Volume-Profit), break-even, and margin of safety analyses which
allows students to experience working through a business scenario and applying
these tools in managerial decision making.
Resources
- Cost-Volume-Profit Analysis Grading Guide
- Generally Accepted Accounting
Principles (GAAP), U.S. Securities and Exchange Commission (SEC)
- Tutorial help on Excel and Word
functions can be found on the Microsoft Office website. There are also
additional tutorials via the web offering support for Office
products.
Scenario: Mary
Willis is the advertising manager for Bargain Shoe Store. She is currently
working on a major promotional campaign. Her ideas include the installation of
a new lighting system and increased display space that will add $24,000 in
fixed costs to the $270,000 in fixed costs currently spent. In addition, Mary
is proposing a 5% price decrease ($40 to $38) will produce a 20% increase in
sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of
shoes. Management is impressed with Mary's ideas but concerned about the
effects these changes will have on the break-even point and the margin of
safety.
Assignment Steps
Complete the
following:
- Compute the current break-even
point in units, and compare it to the break-even point in units if Mary's
ideas are used.
- Compute the margin of safety ratio
for current operations and after Mary's changes are introduced (Round to
nearest full percent).
- Prepare a CVP (Cost-Volume-Profit)
income statement for current operations and after Mary's changes are
introduced.
Prepare a
maximum 700-word informal memo to management addressing Mary's suggested
changes.
- Explain whether Mary's changes
should be adopted. Why or why not? Analyze the above information (three
bullet points above) and use this information to support your suggestion.
Show your
work in Microsoft Word or Excel.
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