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Fall MBA641Project

Fall MBA641Project
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  Project 4 Save your file using your first initial, last name, and name of project.Upload to project 4 link. This project covers material assigned from following Modules: 19 and 21.There are 2 different parts that are not related. Complete each part on the appropriate worksheet. Project 4 Objectives: 1. Develop a customer profitability analysis.2. Recommend a course of action to management based on the customer profitability analysis.3. Determine cost-based pricing.4. Discuss advantages and disadvantages of cost-based pricing.Grading Rubric for project 4:Part 1#1. Each calculation worth .3 pt.14.5#2216.5Part 2Each question worth 1.5 pts. each13.5 Total points Project 4 30 Name: Type your name here     Part 1  Aeronautics Company designs and manufactures electronic control systems for commercial airlines.  Aeronautics Company does contract work for the two major aircraft makers and three other companies that make the narrow-body commercial jets.This is a very competitive field that Aeronautics Company operates in.It is imperative they manage the non-manufacturing overhead costs effectively in order to achieve an acceptable net profit margin. With declining profit margins in recent years, the CEO has become concerned that the cost of obtaining contracts and maintaining relations with its five customers may be getting out of hand. You have been hired to conduct a customer profitability analysis.Below is applicable revenue and cost information you should include in your customer profitability analysis.SalesCustomer 1$3,000,000 Customer 212,000,000Customer 33,000,000Customer 45,000,000Customer 52,000,000$25,000,000 82%of Total Sales generated4%Sales generated per customer The accounting staff determined the additional selling and customer support expenses related to the following four activity cost pools and the cost per activity. Usage of cost driver per customer ActivityActivity Cost Driver DataCustomer 1Customer 2Customer 3Customer 4Customer 5 1. Sales VisitsNumber of visit days$1,300 1061305234162. Product adjustmentsNumber of adjustments1,250233610653. Phone and email contractsNumber of calls/contracts1502203541801381044. Promotion and entertainment eventsNumber of events1,4008266741810In addition to the above, the sales staff used the corporate jet for trips to customers at a cost per hour as stated below and jet hours used per customer as follows:There is a cost of $900 hour Hours used of jetCustomer 124Customer 236Customer 35Customer 40Customer 56 Required:The customer profibility analsysis should show column information for each customer along with a total column for the company. 2. Provide a detailed recommendation to management on what type of actions the company should take as a result of this analysis. In your recommendation you need to specifically identify the different customers, for example Customer 1, from the results of the customer profitability analysis. Solution:Make sure you use cell references to make all calculations. #1Customer 1Customer 2Customer 3Customer 4Customer 5Total2. Provide a detailed recommendation to management on what type of actions the company should take as a result of this analysis. In your recommendation you need to specifically identify the different customers, for example Customer 1, from the results of the customer profitability analysis. Cost of Good Sold (COGS) as a percentage of sales is the following: Aeronautics Company selling and customer support team receives the following sales commissions on each customer account: Cost per unit of activity1. Develop  a customer profitability analysis for Aeronautics Company that shows the sales, cost of goods sold, gross profit on sales, and each cost as a line item  that can be assigned to each of the five customers.Include the customer profitability ratio for each customer and  the company. The customer profitability ratio should be shown in percentage terms taken out to 2 decimal places. Make sure you use cell references to make all your calculations.  Part 2 Communications Unlimited provides support services to its clients.This company expects to earn an annual return on the assets invested at a rate of: 16%The company has the following amount invested in the business:$6,000,000 The annual budgeted costs for next year are: Variable costsFixed costs Support Services$400,000 1,900,000The annual budgeted hours for next year are:Consulting services 50,000 hours Required:You must use cell references for all calculations. 1. Determine the Target profit for the company.3. Determine the variable cost per hour. 4. Determine the revenue per hour that will be charged if variable costs is the basis for markup.6. Determine the total cost per hour. 7. Determine the revenue per hour that will be charged if total costs is the basis for markup.8. Explain why answers 2-4 in comparison to 5-7 are the same or different.9. Discuss the advantages and disadvantages of using a cost-based pricing model. You need to include an outside reference that supports your discussion on advantages and disadvantages of using a cost-based pricing model. Make sure you include the reference in APA style. Enter your response in the textbox below.2. Determine the markup on variable costs in percentage terms .5. Determine the markup on total costs in percentage terms .   Type or copy your response into this textbox, which must include comments from outside reference to support your discussion of cost-based pricing model. Make sure you provide outside reference with APA citaon below your comments.
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