Professional Documents
Culture Documents
7/5/12
Explain why Williams assumption leads to a higher claim. Is this behavior ethical?
Assumption: More costs you assume are fixed the higher claim.
Company can claim higher when the difference between projected and actual
No, because it can have a bad impact on the companys image if the secret is revealed. Also
7/5/12
b. Recalculate the claim assuming 40% of selling and administrative costs are variable.
PARTICULARS Sales Less: cost of goods sold Gross margin Less: selling &admin cost (29,56,048 + 3695059+1,00,000) Income from operations
40% of 61,58,432 = 24,63,373 (S & Admin cost of 2004) 20% of 24,63,373 = 4.92,675 Variable cost (2005) = 24,63,373 + 4,92,675 = 29,56,048 61,58,432(T.C) 24,63,373 (V.C) = 36,95,059(F.C)
7/5/12
CONT
7/5/12
Es
7/5/12
7/5/12