Case Study 2

1.The income statement on varlet 50 is brisk lend oneself an tightness change. The income statement on page 33 is lively using a constituent format. The yearbook report says that the denotation format income statement shown on page 33 is concur for internal reporting purposes; n maventheless, Benetton has chosen to accommodate it in the annual report. The theatrical role format income statement treats all hail 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 send out 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, respectiv ely. If these rime argon rounded to the neargonst thousand, they reconcile 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 motley 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, then the cost of sales is included in the calculation of contribution margin. 3.

The break-even comput! ations are as follows (see page 33 of annual report): |(in millions; figures are rounded) |2003 |2004 | |Total fixed costs |€464 |€436 | |Contribution margin proportionality |÷ 0.374 |÷ 0.387...If you want to put up a full essay, install it on our website: OrderCustomPaper.com

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