Case Studies
Case Studies
1. Sourcing decision for the X73 materials in the best interest of:
d. Zumwald AG
The company needs to make sure that its each division should be benefiting
in every business activity. In this case, if anyone of them will consider outsourcing
from other company other division will suffer especially the ECD. To secure the
company’s big win, its every division should collaborate to support the
company’s main goal. In this case, they should avoid selfish decisions but
focusing on the company’s gain as a whole. They should set aside outsourcing
but patronizing their own.
PROFIT PLANNING
SALES BUDGET
Less Disbursements
Merchandise purchases $258,000 $318,000 $244,000 $ 820,000
Advertising 200,000 200,000 200,000 600,000
Rent 18,000 18,000 18,000 54,000
Salaries 106,000 106,000 106,000 318,000
Commissions 26,000 40,000 20,000 86,000
Utilities 7,000 7,000 7,000 21,000
Equipment purchases 16,000 40,000 56,000
Dividends paid 15,000 0 0 15,000
Total Disbursements $630,000 $ 705,000 $ 635,000 $1,970,000
Excess (deficiency) of
receipts
over disbursements $(120,000) $ 40,000 $ 280,000 $100,000
Financing:
Borrowings $ 170,000 $ 10,000 0 $ 180,000
Repayments $(180,000) (180,000)
Interest (5,300) (5,300)
Total financing $ 170,000 $ 10,000 $(185,300) $ (5,300)
EARRINGS UNLIMITED BUDGETED INCOME STATEMENT FOR THE THREE MONTHS ENDED
JUNE 30
Sales $2,150,000
Variable expenses:
Cost of goods sold $ 860,000
Commissions $ 86,000 $ 946,000
Contribution Margin $1,204,000
Fixed expenses:
Advertising $ 600,000
Rent $54,000
Salaries $318,000
Utilities $ 21,000
Insurance $ 9,000
Depreciation $42,000 $1,044,000
Net operating income $160,000
Interest expense $(5,300)
Net income $154,700
Assets:
Cash $94,700
Accounts receivable (see below) $500,000
Inventory $48,000
Prepaid insurance $12,000
Property and equipment, net $964,000
Total assets $1,618,700
1. Boyne University Motor Pool Flexible Budget Cost Control Report that shows
spending variances For the Month Ended March 31
2. What are the deficiencies in the original cost control report? How does the report
that you prepared in part (1) above overcome these deficiencies.
The Deficiencies in the original cost control report are the differences on the
distance and number of vehicles after comparing the monthly budget cost control
report against the actual one. The new report that I prepared above overcame
these deficiencies because it is already based on the actual factors.