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(Solved) The year has passed and Ron has become used to being able to come


The year has passed and Ron has become used to being able to come to you with more and more complex finance


HRM732

 

Individual Assignment #2 (30 Marks) 15% of the overall grade for the course

 

The year has passed and Ron has become used to being able to come to you with more and more complex finance

 

and accounting questions about this Ukrainian Division. He has come into your office in the middle of November of

 

the following year. Your projects are going quite well as he has a new task for you. He?s been reviewing the

 

operations of the Ukrainian plant and has some questions about the Income Statement. The plant appears to be

 

much more profitable than the other bottling plants within the company and he?s wondering about implementing

 

some of the practices that he has seen there into Canadian Bottling sites. He has provided you with the Income

 

Statement that the Canadian finance team has provided him and wants some key pieces of information from you.

 

Ukrainian Bottling Company Inc.

 

Income Statement

 

For the Year Ended October 31st, XXXX

 

Revenue

 

Cost of Goods Sold

 

Labour

 

Material

 

Total Cost of Goods Sold

 


 

$650,000.00

 


 

Gross Profit

 

Expenses

 

Packaging Labour

 

Electricity

 

Amortization

 

Rent

 

Shipping

 

Total Expenses

 


 

$525,000.00

 


 

Net Income

 


 

$237,000.00

 


 

$75,000.00

 

$50,000.00

 

$125,000.00

 


 

$67,000.00

 

$14,000.00

 

$32,000.00

 

$15,000.00

 

$160,000.00

 

$288,000.00

 


 

An executive summary of their financial position has been provided by the Ukrainian Management team; all of this

 

information appears to be useful to them but, only some is relevant to you. Highlights of the financial figures are as

 

follows:

 

Current number of unit produced:

 

Number of Employees on Staff:

 

Original cost of Smelting

 

Machinery:

 

Number of Shares Outstanding:

 

Trading Price per Share:

 


 

12,000

 

521

 

$85,00

 

0

 

125,00

 

0

 

$12

 


 

Required:

 

I. Identify all the expenses above as being either Fixed or Variable. For expenses labeled Shipping, Amortization

 

and Electricity, explain why you chose either fixed or variable. (7 Marks)

 

II. Using your cost behaviour breakdown, calculate the Contribution Margin for each unit produced. (7 Marks)

 

III. What would be the number of units necessary to produce for a breakeven scenario? (5Marks)

 


 

IV. Management has recently discovered that they are now able to lower their labour costs from 67,000 to 55,000

 

within the year with all other costs remaining the same. What is the Contribution Margin now? (7 Marks)

 

V. Calculate the Gross Profit Margin and Net Profit Margin Ratios. (4 Marks)

 


 

 


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DATE ANSWERED

Oct 15, 2019

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