5mm to the cost of 9.7mm is the cost of goods manufactured from cost of inventory on hand 12/31/2007.
3.) if the variable manufacturing cost per unit stayed equal in 2009 and 2010, the sales volume on nail polish after the price reduction would increase to a maximum of the projected 11.6. The variance between the budgeted and expected sales is a function of the increase in the variable manufacturing cost. However, should there be no actual increase, the variance in projected and actual sales should be reduced to zero.
4.) Based on the level of annual total sales dollars needed to break even in 2008, 2009, and 2010, the approximate level of annual sales is 90% of the 2010 sales, or 28mm.
5.) Given the lump sum loan repayment in 2012, the firm is likely to break-even due to the offsetting increase in operating capital due to the loan repayment.
6.) Budgeted Income Statement
Sales
40
Cost of Goods Sold
27.7
Gross Margin
12.3
Marketing & Promotion
3.4
General Administration
1.3
Interest
1.8
Pretax Income
5.8
Cash FlowBudget
Cash receipts from Customers
40 mm
Cash disbursements
Variable Manufacturing
14.2
Fixed Manufacturing
1.0
Marketing &...
Variable costs are lower than fixed costs and represent the cost of operations. Additionally variable costs are not assets as are fixed costs and therefore variable costs are not a generator of revenues but rather an expense that must be managed. Cash flow would increase under the suggested method due to the costs being mitigated with smaller figures.
8) the major issues include the declining…
