...Highway, CSEZ, Angeles City, Pampanga BILL FRENCH CASE ANALYSIS Calamiong, Yna Marie Espejo, Jean Macabuhay, Minorka Salenga, Darlene Samia, Mark Valloyas, Hazel Marie BACKGROUND OF THE STUDY Bill French is a staff accountant at Duo Products Corporation. He has been doing routine types of analytical work and is reporting to his boss, Wes Davidson; a controller of the said company. French was a business school graduate and was considered by his associates to be quite capable and unusually conscientious. It was this latter characteristic that had apparently caused him to “rub some of the working folks the wrong way,” as one of his co-workers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Davidson’s invitation for Bill to attend an informal manager’s meeting had come as a surprise to others in the accounting group. However, when French requested permission to make a presentation of some breakeven data, Davidson agreed. Duo Products had not been making use of this type of analysis in its planning procedures. Basically, what Bill French had done was to determine the level at which the company must operate in order to break even. According to him, the company must be able to at least sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. In addition to that, according to French, it will not make a profit unless it covers...
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...BILL FRENCH Bill French picked up the phone and called his boss, Wes Davidson, controller of Duo-Products Corporation. “Wes, I’m all set for the meeting this afternoon. I’ve put together a set of break-even statements that should really make people sit up and take notice – and I think they’ll be able to understand them, too.” After a brief conversation, French concluded the call and turned to his charts for one last checkout before the meeting. French had been hired six months earlier as a staff accountant. He was directly responsible to Davidson and had been doing routine types of analytical work. French was a business school graduate and was considered by his associates to be quite capable and unusually conscientious. It was this later characteristic that had apparently caused him to “rub some of the working folks the wrong way,” as one of his coworkers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Davidson’s invitation for French to attend an informal manager’s meeting had come as a surprise to others in the accounting group. However, when French requested permission to make a presentation of some break-even data, Davidson acquiesced. Duo-Products had not been making use of this type of analysis in its planning procedures. Basically, what French had done was to determine the level at which the company must operate in order to break even. As he put it, The...
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...204 030 BILL FRENCH, ACCOUNTANT Bill French picked up the phone and called his boss, Wes Davidson, controller of Duo- Products Corporation. “Say, Wes, I’m all set for the meeting this afternoon. I’ve put together a set of break –even statement that should really make the boys sit up and take notice- and I think they’ll be able to understand them, too.” After a brief conversation about other matters, the call was concluded and French turned to his charts for one last check-out before the meeting. French had been hired six months earlier as a staff accountant. He was directly responsible to Davidson and, up to the time of this case, had been doing routine types of analysis work. French was an alumnus of a liberal arts undergraduate school and graduate business school, and was considered by his associates to be quite capable and unusually conscientious. It was this latter characteristic that had apparently caused him to “rub some of the working guys the wrong way,” as one of his co-workers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Wes Davidson invitation to French to attend an informal manager’s meeting had come as some surprise to others in the accounting group. However, when French requested permission to make a presentation of some break –even data, Davidson acquiesced. The Duo-Products Corporation had not been making use of this type of analysis in its review...
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...1) * * Ele assumiu que há apenas um ponto de equilíbrio para a empresa ( pela média dos 3 produtos) * Ele também assumiu que o mix de vendas permanecerá constante * Ele também assumiu que o mix de vendas permanecerá constante . A receita total e as despesas totais se comportam de forma linear ao longo do intervalo relevante * Uma vez que a capacidade está sendo expandida para aumentar a produção de Produto C , pode -se supor que este aumento deverá ser atribuído a este produto. Produção de Produto A está a ser reduzida, mas o seu nível de custos fixos tem sido assumido como sendo inalterada 2) Cálculo do break even point usando as novas estimativas: Pontos de equilíbrio foram calculados utilizando as fórmulas : Ponto de equilíbrio do Número de unidades = Custos fixos / margem de contribuição por unidade Margem de contribuição por unidade = preço de venda - custo variável unitário | Aggregate | "A" | "B" | "C" | Vendas em plena capacidade (unidades) 2000000 Volume de Vendas (unidades) 1750000 | 400000 | 400000 | 950000 | Unidade do preço de venda $6,948 | $10 | $9 | $4,8 | Receita de Vendas ...
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...Table of Contents Issues 1 Facts 1 Analysis 2 Conclusion/Recommendations 4 References/Bibliography 5 Issues 1. What are the assumptions implicit in Bill French’s determination of his company’s break-even point? 2. On the basis of French’s revised information, what does next year look like: a) What is the break-even point? b) What level of operations must be achieved to pay the extra dividend, ignoring union demands? c) What level of operations must be achieved to meet the union demands, ignoring bonus dividends? d) what level of operations must be achieved to meet both dividends and expected union requirements? 3. Can the break-even analysis help the company decide whether to alter the existing product emphasis? What can the company afford to invest for additional “C” capacity? 4. Why is the sum of the three break even analysis volume from Exhibit 3 not equal to the 1,100,000 units aggregate break-even volume? 5. Is this type of analysis of any value? For what can it be used? Facts Bill French was a staff accountant for six months at Duo-Products Corporation. As a staff accountant he was reported directly to the company’s controller Wes Davidson and performed routine analytical work for him. French was the invited to an informal manager’s meeting. However, French wanted to present certain break-even data during the meeting. As part of his presentation he used the following information: plan capacity of 2 million per year, past year’s level...
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...BILL FRENCH I. BACKGROUND AND ISSUES Bill French was staff accountant of Duo-Products Corporation. He was reporting to Wes Davidson and had been doing routine types of analytical work. In an informal manager’s meeting, Davidson invited Bill French to attend. French choose to present break-even data to determine the level at which the company must operate in order to break-even. During the meeting, French was challenged and questioned because his presentation failed to consider some aspects of the company’s operation such plans for expansion in sales and production, the product mix and prices on individual product basis since he was only using “averaging”. This is because of his following assumption: • He has assumed that there is just one breakeven point for the firm (by taking the average of the 3 products). • He has also assumed that the sales mix will remain constant. Total revenue and total expenses behave in a linear manner over the relevant range. • Since the capacity is being expanded to increase production of Product C, it could be assumed that this increase should be allocated to this product. Production of Product A is to be scaled down, but its level of fixed costs has been assumed to be unchanged He also failed to consider the interest of other stakeholders such as taxes, dividends, expected union demands and the question on product emphasis. French is requested to prepare a thorough break-even analysis taking into account all the series of assumptions...
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...Strategic cost analysis & management: Case Study Bill French Accountant Takeaways Bill French, aggregated BEP basic Sales volume Unit sales price (+) Sales revenue Unit var. cost (-) Total VC (=) Contribution margin (-) Fixed cost (=) Operating profit (-) Taxes (=) Net Profit after taxes Dividends (=) Net Profit 1 076 406 1,159 1 247 400 0,56 607 401 640 000 640 000 0 0 0 0 0 basic+ dividend 1 328 688 1,159 1 539 760 0,56 749 760 790 000 640 000 150 000 75 000 75 000 75 000 0 basic+ union 1 189 275 1,159 1 378 200 0,62 738 200 640 000 640 000 0 0 0 0 0 + dividend + union 1 470 093 1,159 1 701 216 0,62 911 216 790 000 640 000 150 000 75 000 75 000 75 000 0 Bill French, line-by-line BEP basic Sales volume at aggregated BEP 1 076 406 basic+ union 1 189 275 BEP A (in units) BEP B (in units) BEP C (in units) 170 000/0,42= 404 762 275 000/0,88 = 314 286 195 000/0,55 = 354 545 170 000/0,30 = 576 271 275 000 / 0,81 = 338 462 195 000/0,53 = 371 429 Bill French, aggregated CVP calculations basic Sales volume Unit sales price (+) Sales revenue Unit var. cost (-) Total VC (=) Contribution margin (-) Fixed cost (=) Operating profit (-) Taxes (=) Net Profit after taxes Dividends (=) Net Profit 1 160 500 1,159 1 344 854 0,56 654 854 690 000 640 000 50 000 25 000 25 000 0 25 000 + dividend 1 412 783 1,159 1 637 214 0,56 797 213 840 000 640 000 200 000 100 000 100 000 75 000 25 000 + union 1 282 188 1,159 1 485 873 0,62 795 872 690 000 640 000 50 000 25 000 25 000 0 25 000...
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...Case Study Analysis : Bill French Based on Break Even Point INTRODUCTION * Bill French was a Staff Accountant in Duo-Products Group. * He used to report directly to his boss, Wes Davidson(Comptroller). * He wanted to do use Break-even analysis for the planning procedures, which was first of its kind for the Duo-Products Group. * Basically what French had done was to determine the level at which the company must operate in order to break even. * As he put it, 1. The company must be able at least to sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. 2. Further, it will not make a profit unless it covers the fixed costs as well. 3. The level of operation at which total costs are just covered is the break-even volume. 4. This should be the lower limit in the planning. ACCOUNTING RECORDS * The accounting records had provided the following information that French used in constructing his chart: 1. Plant Capacity -2 million units per year. 2. Past year’s level of operations - 1.5 million units. 3. Average unit selling price - $7.20. 4. Total fixed costs - $2,970,000. 5. Average unit variable costs - $4.50. * From the above information, French observed that 1. Each unit contributed $2.70 to fixed costs after covering its variable costs. 2. For break even, unit sold must be 1,100,000. 3. As variable costs per unit is 62.5% of the...
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...Bill French Case 16-3 Introduction French, a staff accountant who was hired six months was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Then, he was requested permission to make a presentation of some break-even data. The Duo-Products Corporation had not been making use of this type of analysis in its planning or review procedures. What French had done was to determine the level at which the company must operate in order to break even. He uses information given in past accounting records to construct his break even analysis without take into consideration with other department about the company operation. As per Bill French: “The company must be able at least to sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. Further, it will not make a profit unless it covers the fixed cost as well. The level of operation at which total costs are just covered is the break-even volume. This should be the lower limit in all our planning.” Question 1 What are the assumptions implicit in Bill French’s determination of his company’s break-even point? 1. There was only one break-even point for the firm whether product by product or in total (he taking average of 3 products). Refer to the table below. | A | B | C | Aggregate | Sales at full capacity (units) | | | | 2,000,000 | Sales Volume (units) | 600 000 | 400 000 | 500 000 | 1 500 000...
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...Firm Analysis Step 1 we choose the following two stocks: Netflix Sector: Services. Industry: Music & Video Stores. Industry info : In this industry there is a huge competition between all the companies however, the music and video industry is very far away from declining. Growth is always occuring to that industry new companies are always introduced and old companies struggle to stay in the market. Consumers never lose their apetite. However, technologies change new companies get in and old get out. but in my point of view the industry will always be profitable. Netflix is an example of an expanding company in an expanding industry for various reasons: Since Netflix is still getting revenues despite of the fierce comptetion in the movie sector. They still have a growing base of customers and consumers. Netflix did also manage in creating the new movie/tv shows rentals mentality after shifting from sending DVDs through mail into unlimited streaming. And now netflix expanded even more and began producing their own shows. That growth in their profit and Netflix's ability to adapt with the the market and consumer habbits netflix is still far away from stagnation. Sprint Sector: Technology. Industry : Wireless Communications. We need to fill this Step 2 we went to the Wharton Research Database Services (WRDS): http://wrds.wharton.upenn.edu/ and downloaded the following data for our two stocks: • ACT = current assets, total; • LCT = current liabilities...
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...asset pricing theory: the returns to value and momentum strategies and also, the comparison of volatility models. Our analysis is divided in two parts: in the first, we provide a monthly view on 115 stocks from the S&P 500 index for the past twenty four years and the respective return premia resulting from value and momentum strategies. In the latter part, the main goal is to test different volatility models by analyzing historical data from Microsoft stocks. Therefore, we follow the structure of Asness et al. (2013) while analyzing value and momentum, and used the methodology of several authors to define and calibrate the data. Our results are in line with the literature since we detected return premium for value and also for momentum. Nevertheless, not all of the conclusions of the literature are confirmed in our analysis, as we will demonstrate. On the second section, ARCH (5), GARCH (1,1) and Taylor/Schwert GARCH(1,1) models are tested revealing the supremacy of the latter. Key words: Market efficiency, Value, Momentum, ARCH, GARCH, Taylor/Schwert, Volatility Models. 1. Introduction Our research is mainly related with the recent literature published on global asset pricing. We have followed Asness et al. (2013) where the authors present evidence of value and momentum return premia across eight different asset classes and markets. Moreover, Fama and French (2012) examine the returns to size, value, and momentum in individual stocks. The main characteristic of financial...
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...Analysis of Case Studies Titled: TGIF & What’s Your Culture Worth? Shenae Adams 0704671 Tutor: Myrtle Weir BBA4 – HRM (D) University of Technology, Jamaica April 11, 2011 Summary of Case: TGIF The case titled ‘TGIF’ speaks to a weekly beer bust held at Quantum’s Seattle Headquarters. The company, which was founded three (3) years ago by Stan Albright and Erin Barber, hosts these beer busts to allow the employees to relax as a reward for their extra efforts. Quantum has grown to more than 200 employees and $95 million in sales over the past three (3) years. Bill Carter, the company’s corporate attorney, on attending one of the weekly beer busts received good reviews about working at Quantum. After a work day of 16 hours, six (6) days a week, the beer bust held every Friday afternoon seemed to be keeping employee morale at an enthusiastic level. However, Bill Carter had some reservations or concerns about serving alcohol at a company sponsored party especially after observing a new employee’s behavior at the party after he had lost his balance and fell on the snack table. He believed that the beer bust parties were getting out of hand and could possibly result in an exposure to liability. There is now a dilemma between wanting to keep the team spirit and at the same time reduce Quantum’s liability exposure. Review of the Case The case, TGIF, presents an organization, Quantum Software that though it was founded three (3) years ago has managed to set for...
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...distance between the two, it is not possible to simultaneously hand over goods with one hand and accept payment with the other. 2. Basic documents of trade. What are the three basic documents used in trade with unrelated parties? The fundamental dilemma of being unwilling to trust a stranger in a foreign land is solved by using a highly respected bank as intermediary. A greatly simplified view is described in Exhibit 23.3. In this simplified view, the importer obtains the bank’s promise to pay on its behalf, knowing that the exporter will trust the bank. The bank’s promise to pay is called a letter of credit. The exporter ships the merchandise to the importer’s country. Title to the merchandise is given to the bank on a document called an order bill of lading. The exporter ask the bank to pay for the...
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...Case 16-3: Bill French Note: This case is unchanged from the Eleventh Edition. Approach This case requires quite a few calculations, but it is a good case for introducing students to the uses and limitations of break-even analysis. It can be used to discuss many of the hidden assumptions involved in such an approach. Some instructors also find it a good vehicle for discussing some of the human problems arising when a young, well-educated person begins working in a business. Finally, at The University of Michigan we have found it useful to defer this case until Chapter 26, when we teach several cases on linear programming: Bill French can be used as an introductory case to raise the issue of what product mix is optimal given resource and/or sales volume constraints. Comments on Questions Question 1 There is undoubtedly a long list of assumptions that can be related to this, or any, break-even analysis. Part of the problem of dealing with analyses of this sort is that they take on the characteristic of being static even though the form of presentation might lead one to believe that here is a moving, dynamic analysis that allows for a variety of changed conditions. To an extent this is true; but there are many conditions that are assumed to be constant. It is to the assumed constants that the students must ultimately direct their attention. For instance: 1. French has had to assume that the variability of the variable costs is constant. French has thus assumed a relatively constant...
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...As the cries of “Je Suis Charlie” erupted in France following the 2015 terrorist attack on Charlie Hebdo in Paris, France, the world echoed questions regarding the interpretation of freedom, the limitations of rights, and the roles placed to guard those targeted when freedoms are exercised (A Nation). Nevertheless, the attack sparked a rise in political polarization which tightened tensions between the people of France as the country divided ideologically while attempting to answer the difficult question, “what is free speech?” Gaining insight from American politics, whose constitution was heavily influenced by French political values of freedom and liberty, the First Amendment of the United States Constitution guarantees its people the right to express their opinions and beliefs through writing, demonstrations, and other forms of expression without government restraint unless the direct (words) and symbolic (actions) conflict with federal law (“What Does”). From a legal standpoint, the First Amendment of the...
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