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A can manufacturing company produces




1`.A can manufacturing company produces and sells three different types of cans: Versions X, Y;and Z. A high-level, simplified profit/loss statement for the company is provided here. Corporate;overhead (rent, general and administrative expense, etc.) is allocated equally among the three;product versions. After reviewing the statement, company managers are concerned about the;loss on Version Z and are considering ceasing production of that version. Should they do so?;Why or why not?;Version X Version Y Version Z Total;Net Can Sales $180,000 $240,000 $105,000 $525,000;Variable Costs 105,000 135,000 82,500 322,500;Corporate Overhead 60,000 60,000 60,000 180,000;Contribution to Profit 15,000 45,000 37,500 22,500;2.3-5 Evaluating Performance in a Small Business;A few years ago, a construction manager earning $70,000 per year working for a regional home;builder decided to open his own home building company. He took $100,000 out of one of his;investment accounts that had been earning around 6% a year and used that money to start up;the business. He worked hard the first year, hiring one employee (his only salary cost for the business;was the $40,000 paid to this employee), and generated total sales of $1,000,000. Total material;and subcontracted labor costs for the year were $900,000. Calculate accounting profit.;What are the opportunity costs for the manager of being in this business relative to returning;to his old job? What is the economic profit of the business?;3.


Paper#28940 | Written in 18-Jul-2015

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