GBMT 1001-01 Take Home Assignment – Worth 16% of Final Mark

Question 1 (3 Marks)

North Company sells a single product. The product has a selling price of $30 per unit and variable expenses are 70% of sales. If the company’s fixed expenses total $90,000 per year, then what will be its break-even point for sales? The corporate tax rate is 30%. A. $90,000.

1. $300,000. C. $42,000. D. $210,000.
2. None of the above

Question 2 (3 Marks)

Last year, Perry Company reported EBT of $7,000. Its total variable expenses were $66,000, or $6 per unit. The unit contribution margin was $3.00, and the corporate tax rate was 40%, while the interest rate is 8%. What is the break-even point in units for Perry Company?

1. 11,000 units. B. 9,600 units. C. 22,000 units. D. 12,400 units
2. None of the above

Question 3 (3 Marks)

Total fixed costs for Herman Enterprises are $200,000. Total costs, both fixed and variable, are $550,000 if 100,000 units are produced. The company had a long term loan of $250,000. If the corporate tax rate is 40%, and the cost of capital is 12%, what is the variable cost per unit?

2. A) $2.00/ B) $3.50/unit. C) $4.00/unit. D) $5.50/unit.
3. E) None of the above

Question 4 (3 Marks)

Total costs for Watson & Company at 50,000 units are $300,000, while total fixed costs are $150,000; the gross margin is 25% and the corporate tax rate is 40%. The total variable costs at a level of 200,000 units would be

1. A) $ 30,000. B) $ 60,000. C) $400,00 D) $800,000.
2. E) None of the above

Question 5 (3 Marks)

Georgian Company sells its products for $1,000/unit. Gross margin is 30%, while operating costs are $12,000. The corporate tax rate is 40%. How much in sales will Georgian have to reach to earn $36,000 Net Income?

1. A) $180,000 B) $200,000 C) $240,000 D) $300,000
2. E) None of the above

Question 6 (15 Marks)

Classify each of the following cost as fixed or variable

1. a) Credit card transaction fees paid by retailer – $0.20 per transaction plus 2% of the sales amount
2. b) Cost of coffee sold at Tim Horton’s
3. c) Cost of paint used at an auto body shop d) Syrup used by an ice cream parlour
4. e) Property tax on an electronics factory f) Electricity costs for the factory
5. g) Boxes used to package computer components at Dell h) Wages paid to hourly retail staff at the company store i) Annual Web hosting fee for company Website
6. j) Annual salaries paid to office staff k) Monthly lease payment on factory
7. l) Straight-line depreciation on production equipment
8. m) Rental car fees for company business travellers – billed at $0.45 per kilometre n) Commissions paid to sales staff – 7% of sales revenue
9. o) Gasoline used to drive the company shuttle van

Question 7 (12 Marks)

Read the following company initiatives, and determine which of the balanced scorecard perspectives is being addressed (financial, customer, internal business, or learning and growth)

1. a) Number of repeat customers
2. b) Purchasing efficient production equipment c) Reducing employee absenteeism
3. d) Employee satisfaction
4. e) Updating retail store lighting f) Paying quarterly dividends g) Variable cost per unit
5. h) Percentage of market share
6. i) Number of hours of employee training j) Number of new products developed
7. k) Yield rate (number of units produced per hour) l) Average repair time of your products

Question 8 (6 marks)

Results from Extreme Corporations’ most recent year of operations are presented in the following table (in 000’s):

Sales Operating Expenses Fixed Assets Current Liabilities Interest Expense Long term liabilities Gross Margin Target rate of return Weighted Average Cost of Capital Tax rate Current ratio

$35,000 $12,000 $ 7,100 $ 4,600 $1,250 $ 2,400 75% 14% 12% 30% 1.50

Calculate the following:

1. a) Profit margin

 

1. b) Asset turnover

 

1. c) ROI

 

Question 9 (32 marks; 5 marks for employee satisfaction, 5 marks for customer satisfaction ,10 marks on how you would use this information to improve operations, and 12 marks for overall professional design , originality, presentation and creativity of your surveys)

ZERO marks will be given if your assignment mirrors the assignment of another classmate or if has been copied from the internet

Choose a business that you have shopped at or worked at while attending Georgian College in Barrie. If you are not currently living in Barrie area, please select a business that is close to where you live now.

The business name must either start with the FIRST letter of your FIRST name, or your LAST name. For example, my name is Doug Gray. I would use G and the company would be Georgian BMW.

You need to create the following:

1) Employee satisfaction survey – minimum of 10 survey questions 2) Customer satisfaction survey – minimum of 10 survey questions

From the information gathered from your surveys explain who would be using the information and how this information could be used to improve operations. Please site the website address of the business you choose, or if there is no website, screen shot of a search finding them on the internet.

Question 10 (20 Marks)

The 4 ´ 4 Shop Income Statement – Liner Department for First Quarter of Current Year

The 4 ´ 4 Shop is a large retailer of equipment for pickup trucks. An income statement for the company’s Bed Liner Department for the most recent quarter is presented below

Sales		$700,000
Less: Cost of goods sold		250,000
Gross margin		$450,000
Less: Operating expenses:
Selling expenses	$195,000
Administrative expenses	145,000	340,000
Net income		$110,000

 

The liners sell, on average, for $350 each. The department’s variable selling expenses are $35 per liner sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed. The company purchases its liners from a supplier at a cost of $125 per liner.

Required:

Prepare an income statement in good form, for the quarter ended December 31 2022, using the contribution approach.