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Management Accounting and Control at Lindon Company - Case Study Example

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The paper "Management Accounting and Control at Lindon Company" is an outstanding example of a finance and accounting case study. The breakeven point is the point in which when the company sells those units it will be able to meet its variable and fixed cost. Meaning it will be making zero profit. The formula is dividing fixed cost with a difference with selling cost and variable cost…
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First Last name Instructor Course No. 14 May 2018 Management Accounting and Control Lindon company 1. Breakeven Breakeven point is point in which when the company sells those units it will be able to meet its variable and fixed cost. Meaning it will be making zero profit. The formula is dividing fixed cost with difference with selling cost and variable cost. Breakeven point = fixed cost/ (selling price-variable cost) =180000/12 =15000 2. Annual profit Profit is the difference of cost and the cash received from the sales. It involves multiplying the selling price with units produced and then minus sum of multiplication of variable cost with units produced and fixed cost Profit= selling price*units sold-(fixed cost-(variable cost* unit sold)) Sales 16000*40=640000 Variable cost 28*16000=448000 Fixed 180000 12000 3. Level =60000/40+15000 =16500 4. New break-even point Breakeven in unit is the amount of goods if sold can be able to meet the variable cost and fixed cost. Breakeven point = fixed cost/ (selling price-variable cost) =18000/ (40-24) =180000/16 =11250 Imperial Jewelers Before accepting any order the company has to evaluate the effect on the financial statement as the financial statement are very vital as it is what the external and internal uses to evaluate the company, example potential and existing investors will use it to decision if to invest in the company or another company. To accept any project it should be profitable i.e. able to meet the cost involved producing the item. The folong calculation of company income statement of the item only. It involves difference of sales and total coat used in production of the good. Profit = Sales - total cost Normal unit production cost 149*20 2980 Overhead cost 4 Additional material to be used 2*20 40 Additional tool purchased 250 Total cost to produce bracelets 3274 Sale income of selling the bracelets 3399 Profit (difference) 125 Decision Yes, they should accept the deal as it will increase the profit of the by 125 dollars and this will have an effect on the financial statement stamen positively as the income statement will show an increase in profit. The Manhattan Company 1.1 manufacturing support cost driver The company has assumed that they will incur 1 million dollars as manufacturing cost drivers and it based on the direct labor cost, this means that its absorption will be based on the labor spent on each model. The absorption rate will be total cost to be incurred dividing the total hours. =1000000/ (10000+40000) =20 1.2 Manufacture per unit. Using the old method in order to find the total cost to produce each unit will involve adding all the cost drivers that are used to fin the cost that will be used to produce the model.it will involve adding the cost per unit of manufacturing support cost, direct labor and direct material cost DELUXE =40+45+30 =115 REGULAR =20+30+10 =60 Based on four activities. 2.1 Total cost It all the cost that will be associated with the two models using the new model. Using this model the cost are associated with the product are absorbed differently on the product. Absorbing the product we will have the following costs. Deluxe Regular 60000 120000 125000 125000 11000 110000 200000 150000 396000 505000 79.2 12.625 2.2 Comparison There is difference between the costs to produce the model using the two methods. The reason is the old absorption method did not incorporate all the cost drivers and that it charged more on the regular that making the product look cheaper to produce. 2.3 Profitable There is more cost difference is 19.2 shilling and selling price is at 140 hence the profit will be 31.9 (140-79.1) hence this means there is no big difference and using the model the company is able to make profit. 2.4 improve profitability The company can Reduce the cost per unit and using proper costing method for deluxe in order not make a misguided decision. The company can also produce more Deluxe model as they have higher profit hence more total profit. Caltrex Gmbh 1) Strategy in 2012 Yes they were able to achieve the strategy because financial perspective they are able to reach their target although they have a slight difference .this applies to all objectives. 2) Employee satisfaction Yes would have included because the employee satisfaction because they are important in delivering service. The objectives are critical as they have covered all the areas that are relevant to the organization in relation to the measuring the company perspective on the delivering the customer service 3) Target market The company profit increased but did not achieve the market share because some increase in profit could be as a result of other factors such sales to similar customers rather than increase of customers. It is the best method to use overall market share as their aim was to maintain the 60 % not gaining the 40%. Read More
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