Claire's Antiques Analysis Maggie, Thank you for your e-mail and your interest in reducing fixed costs for Claire’s Antiques, which would in turn increase profits. To answer your questions, I feel that we first need to discuss what the differences are between fixed costs, variable costs, and semi-variable (mixed) costs are. Based on the different types of costs, we can then review what current costs does Claire’s have that fits into each category. Then we will be better able to discuss whether or not it is a good idea to convert fixed costs to variable costs. Variable costs, for a manufacturing company, are those costs that increase or decrease as production increases or decreases. If production increases, then variable costs will increase; if production decreases, variable costs will decrease. For Claire’s Antiques, examples of their variable costs would be manufacturing labor, raw materials, and manufacturing overhead. Examples of manufacturing overhead would be the utilities that are used in the production facility, and the oils and lubricants used in the machinery. Fixed costs in a manufacturing company are those costs that remain constant regardless of the level of production. Examples of fixed costs for Claire’s Antiques are: sales and administrative costs, rent and/or mortgage on the production facility, and depreciation. Semi-variable, or mixed, costs are costs that have both fixed and variable costs. An example of a semi-variable cost could be if Claire’s leases their delivery trucks, and the lease includes a mileage fee. The monthly lease would be considered a fixed costs, but the mileage fee would be a variable cost. (Hofstrand, 2007). In most cases, fixed costs are usually higher than variable costs, and can absorb a great deal of profits. Because of this, some companies may consider converting their fixed costs to variable costs. How can you convert fixed costs to variable costs legally? The only way to convert fixed costs to variable costs is through outsourcing. The key to outsourcing is to determine what parts of your fixed costs is attributed to the expertise in the company, and what parts are considered repetitive and simple. A company would want to retain the parts that add a higher value to the company, such as the expertise, and to outsource the simpler repetitive parts. For example, Claire’s Antiques could outsource their sales calls to an outside call center that would charge a fee for each call taken.
Fixed expenses are those that will be there everyday the lodge is open regardless of the number of skiers. The Lodge is open 200 days per year and the cost of running the new lift is $500 per day for the entire 200 days giving us $100,000 in fixed costs. Variable costs are the expenses based on the number of customers. There is an additional $5 expense per skier per day associated with the new lift. If there are 300 skiers multiplied by $5 each multiplied by the 40 days that they are expected to be on the lift, we will have $60,000 in variable expenses.
WMC’s accounting practices incorrectly attribute fixed manufacturing costs to the three Detroit groups in a proportional manner, leading to Group 3’s lack of profitability. Discontinuation of Group 3 pushes a greater percentage of the fixed costs to the other groups impacting their ability to be profitable. Additionally, WMC does not consider the degree to which production at the Detroit plant contributes to the operations and profitability of the other plants. Presently, each plant is accounted for individually. WMC should reevaluate and consider the...
. G. Toys is a leading supplier of high quality dolls that are manufactured in two plants within Illinois, one in Chicago, and one in Springfield. These dolls are sold in retailers throughout the United States and have an established, loyal customer base due to their high quality and popularity (Campbell & Kulp, 2004). In the last few years, due to rising production costs, their most popular doll, Geoffrey, has seen a decrease in profit margin. In this evaluation we plan to address G.G. Toys existing cost system and offers recommendations on whether management should change the costing system at both the Chicago and Springfield plant.
During first quarter operations, Salem Data Services reported 90% of accrued costs were fixed with the remaining being variable. Fixed costs included rent, custodial services, computer leases, equipment maintenance, depreciation, power, system development/maintenance, employee salaries. Salem Telephone also provides corporate services for processing accounts receivable and past-due accounts which fixes the cost paid out by SDS for an essential function of the company. Variable costs include hourly wages and sales promotion since they depend on the amount of business and can change with business activity. Since these were the only variable costs, the cost per revenue hour was calculated (Figure 1) for both operations and sales during first quarter.
Holden is drawn to the consistency of the Natural History Museum because of the feeling of stability and security that it provides for him. For most of his life he has lacked a definite place where he felt like he belonged. In his life Holden has gone to 4 different schools and has lost his little brother to cancer which had fostered feelings of distrust and had made him feel like there is nothing in his life to rely on. A majority of the place and people Holden has encountered as well as the experiences he has had have only depressed him. So far, everything Holden has ever describe has made him angry or sad, but after an encounter with a little girl reminds him of the Natural History Museum, Holden reminisces about the elementary school
The scene of Catcher in the Rye that stands out the most to me was when Holden returns to the museum. This scene stands out because it shows the reader a little insight on Holden’s character as a person. Change is something the troubles Holden, the main change that Holden struggles the most with is maturing into the adult world. This is why he finds comfort in a museum exhibit he has been to since he was a young child. Holden describes “the best thing, though, in that museum was that everything always stayed right where it was” (Salinger 135). This shows why Holden enjoyed the museum so much, the world outside might still be spinning and changing but in the museum everything stayed the same, “You could go there a hundred thousand times. Nobody’d
Oscar Wilde once said, “Everything in the world is about sex except sex. Sex is about power.” The content of this quote embodies A Doll’s House and The Glass Menagerie because of the sexual control in both the plays. A Doll’s House by Henrik Ibsen and The Glass Menagerie by Tennessee William, the characters, although from different time periods, face the hardships of sexual control through the men they admire. Nora is written as the naive protagonist of A Doll’s House, who embodies the themes of the novella as she matures throughout the play. Nora learns that her husband, Torvald, uses her as a doll for his own pleasure and does not truly care for her. In The Glass Menagerie, Laura, the main character, is also
The unlikely pair of “The Glass Menagerie” by Tennessee Williams and “A Doll House” by Henrik Ibsen do share multiple similarities in their domestic situations and in the things they chose to do. . When comparing these two plays you also have to keep in mind about how that both the plays were done in different time periods. Therefore things are going to be different when it comes to the roles of the women. With the “The Glass Menagerie” and “A Doll House” all the characters have flaws, lived in different time period, felt like they were trapped in ways, and reacted to things differently.
The famous masterpiece Mona Lisa created by the late great Leonardo da Vinci was a
By looking at the income statement, 82% of UTC’s revenue is made up of variable cost. 54% of their revenue comes from cost of products sold, 18% comes from cost of service sold.
The Glass Menagerie is a famous play that is both a popular and critical success, written by the award-winning playwright, Tennessee Williams. This play is considered to be one of William’s best-loved plays, even winning the Drama Critics Circle Award. The Glass Menagerie is considered to be “a portrayal of loneliness among characters who confuse fantasy and reality,” and is carefully developed through Aristotle’s elements of drama. These six elements really help to portray the true meaning of the play, and includes the principle of plot, moral disposition, intellect, diction, melody, and spectacle. The use of Aristotle’s elements of drama really help to compose and unite the play as a whole.
Signode Industries Inc. - Providing Packaging Solutions Executive Summary SIGNODE INDUSTRY: DILEMMA AT HAND: Mr. Gary Reed, President of Signode Industries packaging division, is in a dilemma as what he should be his course of action to meet the 6.8% increase in price of cold rolled steel- the raw material used in manufacture of Signode’s primary product, steel strapping. There are few options given in the case: Increase Signode’s strapping prices to offset the increased price of cold – rolled steel. Maintain Signode’s current book prices as increasing prices would affect sales force morale. Introduce price-flex model as proposed by Jack Davis i.e. a kind of selective discounting or premium charging for customized services. Recommendations Reason: (All data in accordance to 1983) In accordance to Exhibit 1: Sales of Packaging Division of the company = $285,950 In accordance to Table A: Sales of Apex = 33.3% of $285,950 Sales of BBM = 26.8% of $285,950 Sales of HDM = 33.4% of $285,950 Sales of Customized Products = 6.5% of $285,950 In accordance to Exhibit 4: Similarly, For Apex: As it has a capacity utilization of 71% now, Suppose a sale is $100. Then contribution is $39.15 Therefore variable cost is $60.85. Now if we increase the capacity utilization to 100%, Sales becomes $ 141 since production increases by [(100-71)/71] * 100 = 41% Variable Cost = 141% of 60.85 = $85.8 Fixed Cost = 69.38% * 12.3 = $8.53 Total Cost = 85.8+8.53 = $94.33 EBIT = Sales – Variable cost – Fixed Cost = $46.67 % of EBIT = [(46.67/141) * 100] = 33.09% Suppose the company sales 100x units, the total cost was 69.38. Thus per unit cost was .6938. Now the company sells 141x units, the total cost...
Term “marginal” is extensively used and known with reference to the economics which means “extra”, whereas with economic view point the marginal cost is the cost of producing every extra unit; however the accounting terminology of “marginal” defines the cost incurred on production other than its fixed cost is the marginal cost. Simply, none of the technique is applied unless it serves the benefits and the marginal costing is used by the firms for its registered benefits. Among all its benefits the primary advantage it serves is its attempt to distinguish the fixed and variable costs, and the method only considers the related variable costs to be included in production cost and the fixed costs are thus later deducted out for ascertaining net profit. The inventory at the year-end is also valued on the bases of variable cost. With all these beneficial characteristics of the said system firms using marginal costing are clearly aware of its ...
The 3 percent decline in sales causing a 21 percent decline in profits can be attributed to the identification of the accounting concept of operating leverage. Operating leverage is what business managers apply to boost small changes in revenue into sizable changes in profitability. Fixed cost is the force managers use to attain disproportionate changes between revenue and profitability. Therefore, when all costs are fixed every sales dollar contributes one dollar toward the potential profitability of a project. Once sales dollars cover fixed costs, each additional sales dollar represents pure profit. A small change in sales volume can significantly affect profitability (Edmonds, Tsay, & Olds, 2011). So, therefore, if sales volume increases,
The first way is achieving a high turnover in service for example a restaurant that turns tables around very quickly, or an airline that turns around flights very fast. This approach means fixed costs are spread over a larger number of units of the product or service. This will result in a lower unit cost. Large businesses do this to create an entry barrier to prevent potential competitors from competing with their product. As they are unable to match the scale necessary to match the large firms low costs and prices.