Case Study 2

1.The income statement on varlet 50 is brisk hire an tightness do. The income statement on page 33 is hustling using a constituent format. The yearbook report says that the fibre format income statement shown on page 33 is try for for internal reporting purposes; n maventheless, Benetton has chosen to hold it in the annual report. The contribution format income statement treats all exist of sales as unsettled costs. The sell, general and administrative expenses shown on the submergence income statement have been broken down into variable and unconquerable components in the contribution format income statement. It appears the Distribution and head expenses and the gross revenue Commissions have been reclassified as variable interchange costs on the contribution format income statement. The sum of these both expenses according to the absorption income statement on page 50 is €103,561 and €114,309 in 2004 and 2003, respectively. If these rime argon r ounded to the ne best thousand, they fit with the variable selling costs shown in the contribution format income statements on page 33. 2.The cost of sales is included in the computation of contribution margin because the Benetton Group primarily designs, markets, and sells apparel. The manufacturing of the products is outsourced to heterogeneous suppliers. While Benettons cost of sales may include some fixed costs, the overwhelming majority of the costs are variable, as one would expect for a merchandising company, then the cost of sales is included in the calculation of contribution margin. 3.

The break-even computations are as follows (see page 33 of ! annual report): |(in millions; figures are rounded) |2003 |2004 | |Total fixed costs |€464 |€436 | |Contribution margin proportion |÷ 0.374 |÷ 0.387...If you want to put up a full essay, differentiate it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper