preview

Essay on Luxor Cosmetics Executive Summary

Satisfactory Essays

Question 1
2008 Variable manufacturing cost as a percentage of selling price
Product (Variable manufacturing cost/WSP Production) Mark up
Lipstick 16.8/21 80% (21/16.8)-1 25%
Nail polish 10.5/15 70% (15/10.5)-1 43%
Creams 2.8/5.6 50% (5.6/2.8)-1 100% 2010
Product
Lipstick 15.3/18 85% (18/15.3)-1 18%
Nail polish 9.3/11.6 80% (11.6/9.3)-1 25%
Creams 3.3/6.6 50% (6.6/3.3)+1 100%
*Note that these calculations are done for goods produced in the year in question Question 2
(cost of goods manufactured in 2008/ sales value for units produced in 2008) * ending inventory 2008
(16.8/21) * 11.5
9.748 million

Question 3
Luxor uses a FIFO inventory system, so the inventory that is sold first …show more content…

- 6.8/(8.0-.0.8) = 0.9 (From Exhibit 2)
Inventory - Find the factor of budgeted ending inventory cost to budget inventory value
i.e. - 6.6/7.0 = 0.9 (from Exhibit 2)
Margins - (Budgeted Sales/Budgeted Cost of Goods Sold) - 1
i.e. - (19.0/18.2) - 1 = 1.0 (rounded)

Income Statement - 2011 Budget Cash Flow - 2011 Budget
Sales 40.0 Cash Receipts From Customers 40.0
Cost of Goods Sold 34.7
Gross Margin 5.3 Cash disbursements
Marketing & Promotion 3.6 Variable Manufacturing 34.1
General Administration 1.3 Fixed Manufacturing 1.0
Interest 1.8 Marketing and Promotion 3.6
Pretax Income -1.4 General Administration 1.3 Interest 1.8
Pro-Forma Year-End

Get Access