Blue Ridge Project Harvard Case Solution & Analysis

Blue Ridge Project Case Study Help

Business expenses are included in the general ledger of the accounts, which is organized by the department to reflect the organization’s chart and to provide budget and control. Because some production classes use more costs/service class costs than others; in the accountant's response, the costs of the service class must be allocated to the production department first and then the expense ratio for each production class in general must be determined. These costs are calculated by dividing the cost of each manufacturing service (its own direct costs plus the costs shared by the customer by the after-sales service) by the number of hours of machinery.

The production share base, based on the company’s production department; improves the use of the rate only for the entire factory, especially when the company starts manufacturing multiple types of products. Some manufactured products might require much of machine time in one class, but little machine time is required in another class.While,some of the products might use completely different combinations of machine time.

Three Differences Between CVP and Traditional Format:

The differences between CVP and traditional format are as follows:

  1. CVP reports are for internal use only, while traditional reports are for external reporting.
  2. CVP reports classify costs and expenses into a variable or fixed category, while traditional reports classify costs and expenses by function.
  3. The traditional format divides costs into sales and sales and management costs, while the payment format divides costs into variable and fixed costs.

In order to calculate the breakeven, the company’s targeted profit and margin of safety; all variable costs have been deducted from the sales volume of the company and then fixed costs have been deducted to find the operating profit. The breakeven point for the company is to sale 405 units in a year. While, if we target the profit of 1500000 in a year, then the company needs to sale 898.44 units per year.

In order to calculate the break even, targeted profit and margin of the company’s safety; all variable costs have been deducted from the sales volume of the company and then fixed cost has been deducted to find the operating profit. The breakeven point for the company is to sale 386 units in a year. If we target the profit of 1500000 in a year; the company needs to sale 846 units annually.

Due to the COVID_19; the fewer units are sold, which increase per unit cost of the company, but the total fixed costs will remain the same and the company will still generate profits.

If the company needs to add new molded line then ithas to sell 825 units in a year.

The three issues faced by the company due to the COVID19, are

  1. Decrease in the sales volume
  2. Bounced checks due to non-operating activities......................................

 

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