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Luxor Cosmetics - Variable Manufacturing Cost - Wholesale Selling price (WSP) - Accounting Assessment Answer
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Internal Code: 1AHCGH
Accounting Assessment Answer
TASK: Case Questions 1. Calculate the variable manufacturing cost as a percentage of the selling price for each product line for 2008 and for 2010. What markup on variable manufacturing cost did the firm use to establish the selling prices for each of the three product lines in 2008? In 2010? 2. Provide the calculation that converts the wholesale selling price (WSP) of the 12/31/2008 lipstick inventory shown as $11.5 million in Schedule A of Exhibit 1 to the “cost” of $9.7 million shown in Schedule B of Exhibit 1. 3. Assuming the variable manufacturing cost per unit stayed the same in 2009 and 2010, did the sales volume of nail polish (in terms of physical units) increase or decrease after the selling price was reduced in 2010? Explain. 4. What is the firm’s approximate level of annual total sales dollars required to break even in 2011? 5. Susan’s proposed budget for 2011 includes a substantial repayment of the bank loan. If the repayment occurs, is the firm likely to break even in 2012? Explain. 6. Prepare a new set of budgets (Income Statement, Cash Flow, and Balance Sheet) incorporating the sales manager’s plan and assumptions. 7. Without doing any calculations, indicate whether the suggested change in the allocation of fixed manufacturing costs would increase, decrease, or leave unchanged next year’s estimated pre-tax income. Why? Would cash flow increase, decrease, or remain the same? Why? 8. What are the major issues that need addressing? Suggest some possible issues, and strategies for dealing with those issues, that you might want to discuss with the founder.This Accounting Assignment has been solved by our Accounting experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.