To: Vice President
It would be in Competition Bikes, Inc.’s best interest to change from a traditional costing system to an activity-based costing system. In this summary you will find information as to why this change is important as it will highlight the differences between traditional based costing and activity based costing systems. This summary will also give you further findings on Competition Bikes, Inc. breakeven point when evaluating the sales units and the sales dollars and also the influence direct materials and fixed costs have on the breakeven analysis performed.
Costing Method
The traditional costing method is a distribution of manufacturing overhead costs to the actual products manufactured. By using this
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to simply identify variations in product costs and pinpoint the variation directly to the source. This helps the company keep control of the company’s costs and expenses. This assists in keeping profits relatively steadily.
The current operations can also be improved by implementing a just-in-time inventory management system. This is where the company only buys the materials that it needs to produce the units that are actually sold. This cuts down on dollars that are tied-up in inventory held in raw materials inventory. This is a considerable amount for Competition Bikes, Inc. and will be lowered enormously as fewer materials are placed in raw materials. This will be billed in the same month in which they are produced creating fewer dollars to be tied up in inventory. This will then be converted to cash to be used as working capital.
Breakeven Point
According to Investopedia the breakeven point is the point at which gains equal losses. For Competition Bikes, Inc. achieving the breakeven point is a leap in the right direction. This will allow them to be one step closer to being a profitable business. Here we will analyze the sales units and the sales dollars of the Titanium and CarbonLite bike models in order to configure the breakeven point.
In order to construct the breakeven point we must use the weight average contribution margin. This is calculated by dividing the combined contribution margin
Preparing for The Joint Commission, Nightingale Community Hospital reviews areas of compliance and non-compliance. A periodic performance review, which is a self-evaluation, is utilized by Nightingale Community Hospital, to prepare for The Joint Commission. The Joint Commission has eighteen accreditation requirements. (Commission, 2013) The periodic performance review found the hospital to be compliant and non- compliant in the following areas:
Our company has a moral obligation to keep our customers safe. The code of ethics within our company is to be honest and provide protection to the children who play with our products. The overall cost to our company is how big of a risk are we willing to take. Our company needs to decide if business growth and profit is more important than the risk we would be taking in delivering those toys to children.
Causes of the Russian Revolution 2 - What were the causes of the Russian Revolution? (n.d.).
Develop and diagram an activity based cost model using the information in the case. Provide your best estimates about the cost and profitability of Wilkerson’s three product lines. What difference does your cost assignment have on reported product costs and profitability? What causes any shifts in cost and profitability?
Competition Bikes, Incorporated (Inc.) makes bicycles for professional and other highly accomplished riders who compete in bike races, biathlons, and triathlons. Approximately sixty percent of all race winners have been victorious using bicycles designed by Competitions Bikes, Inc. This extraordinary success rate is a topic of conversation among racers and has led to exponential success for founder Larry Ferguson who formed the company in 2001 in his garage. Competition Bikes is known for quality products and is leader in the market with the CarbonLite
Snowboards had a cash and cash equivalent of 83.8% during year 12 and year 13, but that
After Columbus mistakenly discovered the Americas in 1492, European countries were soon setting out to establish themselves in this new world. Spain was first to establish itself in the new world, using their powerful military and their navy. The new colonies were completely dictated by the king of Spain, such one of his policies allowing colonists to use the native tribes for forced labor. France was the second major power to establish itself. Their main focus was fur trapping and fur trading. The French quickly learned to work with the Native Americans. The few French settlers, who did come to America, were focused on fur trapping and trading. Because of this, most French settlements were either military forts or trading posts. England
Below is an example of a strategic group map plotted out based on the differentiating characteristics discussed in the previous section:
D: Introduction As a teacher living in a highly religious state, it is important for me to know more about the main religions in Utah. The two most prevalent, being the Church of Jesus Christ of Latter Day Saints (LDS) and the Catholic faith. I would like to know more about their beliefs, holidays, and family traditions. Some of the main beliefs in the LDS culture are Jesus is the Savior of all man, The Word of Wisdom, and the church was restored by their Prophet Joseph Smith. Some of the main beliefs for the Catholic faith are the Bible, the different Saints, and baptism. There are many holidays that are celebrated by both religions. Both Catholics and LDS members celebrate Christmas and Easter. The LDS faith in Utah has a special state
With the release of the new budget for year 9 from Competition Bikes, there are a couple of areas that are a concern that warrant being addressed. The first being the prediction of amount of bikes to be sold; Competition Bikes is expecting 3,510 units to be sold after a year 8 that sold only 3,400 units which was a 15% drop in sales from the year prior (which sold approximately 4,000 units) with zero drop in price point which may make it harder for customers to justify purchasing a bike in the current economy. Understandably, year 8 was in the middle of a recession and the economy could rebound for a productive year 9. However, with only an extra $984 being spent on advertisement, the expectations could fall short unless
The Utah Symphony received approximately 5% of its incoming from their endowment fund annually. The organization raised $3,829 in revenue from rental fees, sets, props, costumes, box office, etc. However, the symphony believes that the fundraising contributions are sufficient enough currently to allow ticket prices to remain the same as the prior year is successful. The up side is that there was a $116,308 in surplus at the end of the year.
Going into 2004, Bob Moyer planned to produce 10,000 bicycles at Mile High Cycles. Construction of his bicycles includes the utilization of three departments, frames, wheel assembly, and final assembly. During this year, Mile High Cycles ended up actually producing 10,800 bicycles to meet higher than expected demand. Bob is curious as to whether or not he was successful in maintaining costs to meet these higher levels of demand.
Break-even point analysis is a measurement system that calculates the margin of safety by comparing the amount of revenues or units that must be sold to cover fixed and variable costs associated with making the sales. In other words, it’s a way to calculate when a project will be profitable by equating its total revenues with its total expenses. There are several different uses for the equation, but all of them deal with managerial accounting and cost management (Break-Even Point, n.d.)
A company's break-even point is the amount of sales or revenues that it must generate in order to equal its expenses. In other words, it is the point at which the company neither makes a profit nor suffers a loss. Calculating the break-even point (through break-even analysis) can provide a simple, yet powerful quantitative tool for managers. In its simplest form, break-even analysis provides insight into whether or not revenue from a product or service has the ability to cover the relevant costs of production of that product or service. Managers can use this information in making a wide range of business decisions, including setting prices, preparing competitive bids, and applying for loans.
To identify the effect of breakeven point for multiple products and ascertain which product is as advantages.