ACC561 Accounting UOP Cost Volume Profit Case Study

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timer Asked: Feb 3rd, 2019
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Question Description

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.

Assignment Steps

Resources: 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.

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®.

Complete calculations/computations using Microsoft® Word or Excel®.

Format your assignment consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment.

Unformatted Attachment Preview

Cost-Volume-Profit Analysis Grading Guide ACC/561 Version 7 Accounting Copyright Copyright © 2017 by University of Phoenix. All rights reserved. University of Phoenix® is a registered trademark of Apollo Group, Inc. in the United States and/or other countries. Microsoft®, Windows®, and Windows NT® are registered trademarks of Microsoft Corporation in the United States and/or other countries. All other company and product names are trademarks or registered trademarks of their respective companies. Use of these marks is not intended to imply endorsement, sponsorship, or affiliation. Edited in accordance with University of Phoenix® editorial standards and practices. Cost-Volume-Profit Analysis Grading Guide ACC/561 Version 7 Individual Assignment: 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 Required 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. Grading Guide Content Met Partially Met Not Met Total Available Total Earned 4 #/4 Computed the current break-even point in units, and compared it to the break-even point in units if Mary’s ideas were used. Computed the margin of safety ratio for current operations and after Mary’s changes were introduced (rounded to nearest full percent). Prepared a CVP (Cost-Volume-Profit) income statement for current operations and after Mary’s changes were introduced. Explained whether Mary’s changes should be adopted. Why or why not? Analyzed the information (first three rows above) and used the information to support student’s suggestion. Showed work in Microsoft® Word or Excel®. Completed calculations/computations using Microsoft® Word or Excel®. The informal memo is a maximum 700 words in length. Comments: 2 Cost-Volume-Profit Analysis Grading Guide ACC/561 Version 7 Writing Guidelines Met Partially Met Not Met Total Available Total Earned 2 #/2 6 #/6 The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements. Intellectual property is recognized with in-text citations and a reference page. Paragraph and sentence transitions are present, logical, and maintain the flow throughout the paper. Sentences are complete, clear, and concise. Rules of grammar and usage are followed including spelling and punctuation. Assignment Total Additional comments: # Comments: 3 ...
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Tutor Answer

JesseCraig
School: Duke University

Attached.

Running head: COST-VOLUME-PROFIT

1

COST-VOLUME-PROFIT
Name:
Institution affiliation:
Date:

COST-VOLUME-PROFIT

2
MEMO

To: The Manager
From: (add name)
Date: February 4, 2019

Re: Evaluation of Mary’s suggested changes

I’m writing this memo to inform you the impacts that Mary’s proposed changes will have
on your business. Kindly note that the information presented in this memo is based on the results
of the break-even analysis, margin of safety ratio, and CVP income statement.
From the analysis of the Break-Even Point, the margin of safety ratio and a CVP Income
Statement, Mary’s proposed changes should not be adopted. The adoption of Mary’s changes
will have a negative impact on profit being realized by Bargain Shoe Store. In order words, ...

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Review

Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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