JW Sports Supplies (A) Harvard Case Solution & Analysis

JW Sports Supplies (A) Case Study Analysis

From the above Cost classification it can be seen that the Direct Material, Labor, Sales Commission are depending on the activity and varying with. The Rent, Depreciation and Selling Administrative are fixed by nature followed by the mixed cost as Electricity & Other manufacturing.

Evaluation of Change in Per Unit Cost

From the chart prepared with the data of exhibit 3;it can be seen that the proportionate change in variable cost always remains the same, which can be seen in the direct material cost. Fixed cost reduces with an increase in the level output, which is shown in row 2 & Mixed is the cost which varies with the activity, but not in fixed proportionate as shown in row 3.

Cost Volume Profit Analysis

Evaluation of Manufacturing & Non-Manufacturing Cost

The manufacturing cost is cost that becomes the direct part of the product. The Non-manufacturing cost includes all the cost that are not directly linked with the product, but rather part of the administration.The cost classification of Exhibit 3 is shown in the data below

Contribution Margin Income Statement

Using the given data; a projected income statement is formed, which is given in the Appendix 1.

Contribution Margin per Unit at a Price of $100 per Unit

Breakeven Analysis with Target Profit of $25000

Using the given data; the target profit $25000 can be achieved by following these steps:

• By setting the prices to $118 and having an output capacity of 1500 units.
• Reduction the variable cost $42 from $60 would enable the firm to achieve its target without changing anything.
• By selling 2175 units and keeping all other things constant.
• By reducing its fixed cost from $62000 to $35000,would help the firm to achieve its target.

Breakeven Analysis with Sales Mix

Using the given data; the breakeven analysis using the sales mix can be seen through the following chart:

Chart 10

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