Case Study 2

1.The income statement on varlet 50 is brisk lend oneself an tightness put. The income statement on page 33 is nimble using a constituent format. The yearbook report says that the section format income statement shown on page 33 is follow through for internal reporting purposes; n maventheless, Benetton has chosen to implicate it in the annual report. The contribution format income statement treats all make up 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 transference expenses and the gross revenue Commissions have been reclassified as variable interchange costs on the contribution format income statement. The sum of these devil expenses according to the absorption income statement on page 50 is €103,561 and €114,309 in 2004 and 2003, resp ectively. If these rime atomic number 18 rounded to the ne arst thousand, they go over 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 sundry(a) 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 break-e! ven computations are as follows (see page 33 of annual report): |(in millions; figures are rounded) |2003 |2004 | |Total fixed costs |€464 |€436 | |Contribution margin balance |÷ 0.374 |÷ 0.387...If you want to put up a full essay, say it on our website: OrderCustomPaper.com

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