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(solution) Can you help me correct the errors I made in part I, II, III &


Can you help me correct the errors I made in part I, II, III & IV. Also can you do the section V (memo to management) as outlined in the Final project guidelines and Hampshire company case study documents. Part IV should be a two- to three-page memo to management, please look at the final project rubric. Attached is my assignments I did, and the project requirements.

For part I, cost analysis, perform a cost-volume-profit based on cost classification. I have an error in requirement 1. The fixed costs are given at $295,525. As a result, my Net Income is also incorrect. Since I carried the fixed costs used in requirement 1 to other areas of my worksheet, I will need to make corrections to other areas of the worksheet where fixed costs are utilized. I need to also correct the break-even quantity and break-even revenue since the errors in fixed costs mentioned above. For cost-volume-profit analysis: economic planning, I explained how a CVP analysis can assist management with short-term economic planning and supports response with examples, my narrative contains good information, however, the amounts should be adjusted to include the needed corrections in the worksheet. For Cost-volume-profit analysis: implications, I determine whether the company is breaking even and identifies cost-volume-profit analysis implications for planning, while my narrative contains the required criteria, my numbers should be adjusted to reflect the corrections in the worksheet as noted.

For part II & III, inventory management and benchmarking, inventory management: relevant costs. I did not determine an optimal cost allocation. The income statements on my worksheet are correctly calculated. I have an error on the efficiency variance for labor. The amounts entered are correct, however, the answer should be $1,890 favorable. I did not include any information about this requirement in my paper. I should have selected either the variable costing or absorption costing cost allocation system based on the income statements that I computed. Additionally, I should have selected one of the two methods based on relevant costs. For inventory management: pros and cons, I identified the pros and cons of implementing JIT but does not describe whether the pros outweigh the cons for this company. For inventory management: inventory, I identifies the inventory management method recommended but does not explain why this method will benefit the company. I should specifically identify the inventory management system that this company should implement, and be sure to add this information in my final submission. For benchmarking: benchmarking method, I determined which benchmarking method management should adopt but does not justify response, I need to include additional details about my selection of this choice.

For part IV, alternative costing method, for alternative costing method: main characteristic, for identifying alternative costing systems and describing the main characteristics of each, I need to see the comment on my worksheet and make corrections as indicated. For alternative costing method: method, I need to determine whether the company should adopt the alternative costing method and defends response, I selected TDABC for this business and provided support for my selection as required. For alternative costing method paper, I need to see the comments about a running head on my paper.

Requirement for part V:

Section V: Memo to Management
The management of the Hampshire Company is very interested in measuring performance. They would like you to recommend a strategy to increase business performance. They are not sure whether they should focus on product differentiation or cost leadership. Research additional performance tools to include the balanced scorecard. During your research, consider what performance measurements you would use based on the four perspectives. Provide examples.

In your recommendation, you will want to include the outcome of your previous quantitative analysis and research performed related to cost-volume-profit (CVP), variable and absorption costing, just-in-time (JIT), standard costs, variances, and benchmarking. You will want to review key points and make recommendations based on your current research and prior analysis completed and research performed.

Your two- to three-page memo to management must be submitted as a Word document and must include your responses to Parts A through C of Section V as outlined in the Final Project Guidelines and Rubric document.

V. Memo to Management Your memo to management should serve as a summary of your quantitative analysis, reviewing the key points and recommendations that you feel management should be aware of. A. Describe the overall findings of your analysis, including key elements that management should be aware of.
B. Make a recommendation to management based on your cost accounting analysis that will enhance business planning.
C. Recommend a performance tool to management based on your cost accounting analysis that will improve business operations.


Cost-Volume-Profit Analysis

 

A Cost-Volume-Profit (CVP) analysis can help management with short-term economic

 

planning within an organization. It can be used to assist in establishing prices of products,

 

assists in analyzing the impact that volume has on short-term profits, assist in focusing on

 

the impact that changes in variable and fixed costs have on profits, assist analyzing how

 

the mix of products affect profits, and it also tells management their safety level.

 

A CVP analysis help in establishing prices of products, Contribution Margin is the

 

amount remaining from sales revenue after variable expenses have been deducted, and

 

Contribution Margin goes to cover fixed expenses, any remaining Contribution Margin

 

contributes to income.

 

Contribution margin ratio is total or unit contribution margin divide by sales revenue or

 

units sales price. In requirement 2 of the CVP analysis spreadsheet, the contribution

 

margin ratio is determined to be 52%. This means if the company sell one unit of

 

product, if it make one dollar of sale from it, it is going to retain 52% of that dollar. Each

 

dollar increase in sales revenue results in total contribution margins increase of 52 cents.

 

For example, if the sales increase by 5000, then total contribution margin will increase by

 

2600.

 

According to requirement 3 of the CVP analysis spreadsheet, the company needs 33,231

 

units or $415,385 sales to break even, given it sold 60,000 units and it had $750,000

 

sales, it is operating at the break-even point. The CVP analysis helps management understand the impact that changes in costs have on

 

profit. The company currently sells 60,000 umbrellas per month, if manager believes that

 

an increase of $1000 in the advertising budget would increase umbrella sales to 65,000

 

units. Then it would add $1000 to current fixed expenses, and find out the sales dollars

 

for 65,000 units, and calculate the net income and compare it against the old net income

 

to determine the impact. In an improving market, management would want more cost to

 

be fixed, while in down economy, management would want more of variable cost.

 

The CVP analysis has many implications. The safety margin in requirement 4 of the CVP

 

analysis spread sheet tells the management the amount by which sales can drop before

 

losses begin to be incurred. The management can calculate the number of units the

 

company needs to satisfy a target income. For example, in requirement 7 of the CVP

 

analysis spreadsheet, the company wants a targeted income of $150,000, it found out it

 

need to sell 56,308 units to have the target income of $150,000. The operating leverage

 

measures how sensitive net income is to percentage changes in sales. The degree of

 

operating leverage calculated in requirement 5 is 2.24. With higher leverage, a small

 

percentage increase in sales can produce a much larger percentage increase in net income

 

including tax. Reference:

 

CVP: A Short-Term Planning and Analysis Tool. (2013, September 7). Lecture,

 

Pittsburgh.

 

Chapter 6. (n.d.). Retrieved October 17, 2015, from

 

http://www.smccd.net/accounts/nurre/online/chtr6.htm

 

Cost Volume Profit Analysis. (n.d.). Retrieved October 17, 2015, from

 

http://accountingexplained.com/managerial/cvp-analysis/

 


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