Cost Management

The investors and creditors are interested in knowing things like C.V. because it is a very easy way to address how much money sales a company needs in order to make a profit. They care if the sales mix is accurate because if the sales mix is different, it because a completely different calculation. B. The first financial model was not useful because it did not separate fixed and variable cost. That means a C.V. analysis cannot be done. It separated costs into manufacturing and cost of goods old which is not as useful as knowing which costs are fixed or variable.

C. If I were going to invest in RFC, I would make sure the sales mix is accurate. It is important because the variable cost of beer is only 15% of the beer sales while food and other is 33% and 35% respectively. If food sales are much higher the CM goes down and it results in the Break Even Point being much higher. D. It is difficult to find out how much it costs for a pint of beer because it lists total beer sales without saying how many were sold. It is given as a total percentage of sales which means price or units Anton be figured out.

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E. The Contribution Margin for the company is 822,212/1 Break even then would be sales Dollars-axed cost/COM Margin of safety Actual sales-Breakable sales-MOSS The percentage 36. 8% RFC cannot find the breakable point in units because there is no number of units given in the problem or the cost of one pint of beer. Sales required for a $200,000 profit sales required for a $500,000 profit It assumes that the CM ratio will be the same . 420999 so sales mix must be 40% beer, 55% Food Sales and 5% other sales.