Cvp analysis project : established in 1963 in datura, italy, datura,

CVP Analysis Project

 

Established in 1963 in Datura, Italy, Datura, Ltd., is an international importer-exporter of pottery with distribution centers in the United States, Europe, and Australia. The company was very successful in its early years, but since then, its profitability has steadily declined. As a member of a management team, you will gather information for Datura’s next strategic planning meeting, and you have been asked to review its most recent contribution income statement, which appears below.

 

Datura, Ltd.

Contribution Income Statement

For the Year Ended December 31, 2004

Sales Revenue

 

€ 13,500,000

Less Variable Cost

   
 

Purchases

€ 6,000,000

 
 

Distribution

2,115,000

 
 

Sales Commissions

1,410,000

 
   

Total Variable Costs

 

9,525,000

Contribution Margin

 

€ 3,975,000

Less Fixed Cost

   
 

Distribution

€ 985,000

 
 

Selling

1,184,000

 
 

General and Administrative

871,875

 
   

Total Fixed Cost

 

3,040,875

Operating Income

 

€ 934,000

 

In 2004, Datura sold 15,000 sets of pottery.

 

Complete Part 1:

 

  1. For each set of pottery sold in 2004, calculate the (a) selling price, (b) variable purchases cost, (c) variable distribution cost, (d) variable sales commission, and (e) contribution margin.
  2. Calculate the breakeven point in units and in sales euros.
  3. Historically, Datura’s variable costs have been about 60 percent of sales. What was the ratio of variable cost to sales in 2004? List three actions Datura could take to correct the difference.
  4. How would fixed costs have been affected if Datura had sold only 14,000 sets of pottery in 2004? After you have completed part 1 above, read the following and complete part 2. In January 2005, Sophia Callas, the president and chief executive officer of Datura, Ltd., conducted a strategic planning meeting. During the meeting, Phillipe Mazzeo, vice president of distribution, noted that because of a new contract with an international shipping line, the company’s fixed distribution cost for 2005 would be reduced by 10 percent and its variable distribution costs by 4 percent. Gino Roma, vice president of sales, offered the following information: We plan to sell 15,000 sets of pottery again in 2005, but based on review of the competition, we are going to lower the selling price to €890 per set. To encourage increased sales, we will raise sales commissions to 12 percent of the selling price. Sophia Callas is concerned that the changes described by Roma and Mazzeo may not improve operating income sufficiently in 2005. If operating income does not increase by at least 10 percent, she will want to find other ways to reduce the company’s costs. She asks you to evaluate the situation in a short professional report. Because it is already January of 2005 and changes need to be made quickly, she requests your report within 14 days. Complete Part 2:
  5. Prepare a budgeted contribution income statement for 2005. Your report should show the budgeted (estimated) operating income based on the information provided above and in part 1. Will the changes improve operating income sufficiently? Explain
  6. In preparation for writing your report, answer the following questions:
    1. Why are you preparing the report?
    2. Who needs the report?
    3. What sources of information will you use?
    4. When is the report due? Please submit your responses, to both sections, in a professionalmanner. (See the General Instructions document, in Moodle, for more details). Everything should be typedhighly encourage you to utilize Microsoft Excel (Spreadsheets)! You may also utilize Microsoft Word.
Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our Guarantees

101papers.com is always working towards customer satisfaction. Our professional academic writers always aim at producing comprehensive papers that possess quality and originality at pocket-friendly prices. Students are assured that all their private information is safe with us.

Money-Back Guarantee

101papers.com provides a system where students can request for money-back in case they cancel the order or in the rare instances of dissatisfaction. The refund policy adheres to the company’s term and conditions on money-back.

Read more

Zero-Plagiarism Guarantee

While providing the best professional essay writing services, we guarantee all our students of plagiarism-free papers. All papers produced by our professional academic writers are checked against all web resources and previously completed papers to avoid plagiarism.

Read more

Free Revision Policy

In our urge to provide the best professional essay writing services, we guarantee students of free revision policy. The free revision policy is a courtesy service where students can request for unlimited for their completed papers. We always aim at achieving 100% customer satisfaction rates. The free revision policy is one among many of our major advantages.

Read more

Privacy Policy

At 101papers.com, every student is entitled to total security. Our professional academic writers are always committed to protecting all private information of our customers. We do not share any personal information with third parties. Additionally, we provide safe systems for all online transactions.

Read more

Fair-Cooperation Guarantee

Working with us is the greatest step towards achieving all your academic goals. We always deliver the best professional essay writing services as promised. We, therefore, expect all students to work cooperatively with us, as we work towards achieving our goal, your satisfaction. This way, all services will be delivered accurately and on time.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency