# Cost-Volume-Profit Analysis and Variable Costing – Discussion

Week 3 DQ 1: Cost-Volume-Profit Analysis and Variable Costing – Discussion

Variable Costing and CVP Concepts (Graded)

Welcome to our Week 3 Discussions! To get us started, let’s discuss how CVP analysis is used in managerial accounting decision-making.

Week 3 DQ 2: Cost-Volume-Profit Analysis and Variable Costing – Discussion

Below is the link that will take you directly to the 2004 financial statements of the Benetton Group, followed by the discussion questions.

http://www.benettongroup.com/sites/all/temp/doc/2004_annual_report_en.pdf

Let’s answer these questions in the order that they appear.

1. How do the formats of the income statements shown on pages 33 and 50 of Benetton’s annual report differ from one another (disregard everything beneath the line titled “income from operations”)? Which expenses shown on page 50 appear to have been reclassified as variable selling costs on page 33?

2. Why do you think cost of sales is included in the computation of contribution margin on page 33?

3. Perform two separate computations of Benetton’s break-even point in euros. For the first computation, use data from 2003. For the second computation, use data from 2004. Why do the numbers that you computed differ from one another?

4. What sales volume would have been necessary in 2004 for Benetton to attain a target income from operations of €300 million?

5. Compute Benetton’s margin of safety using data from 2003 and 2004. Why do your answers for the two years differ from one another?

Week 3 Assignments:

Week 3 Case study II Springfield Express (Source 1)

Week 3 Case Study II Springfield Express (Source 2)

Week 3 Case Study II Springfield Express (Source 3)

Week 3 Case Study II Springfield Express (Source 4)

Week 4

Week 4 DQ 1: ABC and Budgeting – Discussion

Let’s start the week by reviewing the following case. First, let’s discuss how the budgeting process as employed by Springfield contributes to the failure to achieve the president’s sales and profit targets.Click here to view the file

Week 4 DQ 2: ABC and Budgeting – Discussion

To begin, download the practice Midterm Exam from Doc Sharing to access questions and topics for review. For multiple-choice questions, please explain why the answer chosen is correct, and why the other choices would not be correct. Please support your response. Let’s begin with the questions on Page 1.

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