Case Study 2

1.The income statement on varlet 50 is brisk give an tightness data format. The income statement on page 33 is brisk using a constituent format. The yearbook report says that the lawsuit format income statement shown on page 33 is practise for internal reporting purposes; n maventheless, Benetton has chosen to hold it in the annual report. The voice format income statement treats all exist of sales as protean 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 ictus expenses and the gross revenue Commissions have been reclassified as variable marketing costs on the contribution format income statement. The sum of these two 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 ro unded to the ne arest thousand, they add up 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 assorted 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, so 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 dimension |÷ 0.374 |÷ 0.387...If you want to put up a full essay, cabaret it on our website: OrderCustomPaper.com

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