4 marks prepared by j kroeker 2013 sauder school of

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Unformatted text preview: would like to know the cash flow that could be expected from 2013 if sales volume remains the same as in 2012? (4 marks) Prepared by J. Kroeker, 2013 © Sauder School of Business, UBC Page 2 e) A special order has been received to produce #6,000 units in 2013 for $125 each. OPTION #1 The CFO would like you to analyze this order with no impact to existing customers (8 marks). OPTION #2 The CFO would like you to analyze this order with no change to production capacity (8 marks) Which option do you recommend and why? ( 4 marks) Prepared by J. Kroeker, 2013 © Sauder School of Business, UBC Page 3 Question 2 (8 marks) To isolate the variable costs we use “rise over run” in creating the hi-low formula, the change in costs divided by the change in units. Your company manufactures generic office furniture. Using concepts from 354 why could the formula not be the opposite è༎ “run over rise”? Thoughtfully explain using your furniture company as the example. Prepared by J. Kroeker, 2013 © Sauder School of Business, UBC Page 4 Question 3 (20 marks) Boulder Limited produces fresh baked goods, so unique that they bought an “organic food” patent a few years ago. The CEO is quite concerned about the reported loss of $475,000 and wonders if they should close the business? The CEO stated the goods news: “ the building we bought for $6,000,000 is going up in value by 1% per year. We use our own delivery vehicles to pick-up fresh ingredients and to deliver our product to our customers. The customers are very happy with the reliable delivery system. Our employees are happy as we provide a $3 per unit commission for items sold. The vehicles are amortized based upon kilometers driven. Revenue (# 50,000) 1,000,000 Direct Materials Direct Labor Amortization : 100,000 150,000 Patent Building Vehicles Factory Insurance 250,000 300,000 350,000 50,000 Cost of Goods sold 1,20...
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This document was uploaded on 03/09/2014 for the course COMM 354 at University of British Columbia.

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