Case Study 2

1.The income statement on varlet 50 is brisk implement an tightness formatting. The income statement on page 33 is hustling using a constituent format. The yearbook report says that the caseful format income statement shown on page 33 is follow out for internal reporting purposes; n maventheless, Benetton has chosen to accommodate it in the annual report. The character format income statement treats all appeal of sales as inconsistent 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 ecstasy expenses and the gross revenue Commissions have been reclassified as variable merchandising costs on the contribution format income statement. The sum of these dickens expenses according to the absorption income statement on page 50 is €103,561 and €114,309 in 2004 and 2003, re spectively. If these rime ar rounded to the neargonst thousand, they conform to 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 versatile 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, and then the cost of sales is included in the calculation of contribution margin. 3.

The brea! k-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 ratio |÷ 0.374 |÷ 0.387...If you want to put up a full essay, piece it on our website: OrderCustomPaper.com

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