Ac505 Benetton Case Study Final

1) The formats of the 2004 Benetton income contestations shown on pages 33 and 50 of their 2004 Annual Report argon as follows. The most important distinction is that the income statement on page 33 is presented in the contribution nest format, grip that on page 55 is presented in the traditional available approach format. Essentially, the contribution approach divides comprises between those that argon unsealed (pre-contribution perimeter) and those which are fixed, with respect to activity. In contrast, the traditional approach separates be by their source (operational areas), e.g. production, administration, sales etc., regardless of whether they are variable star or fixed. The contribution approach is particularly blue-chip as a management tool for planning, control and decision-making connect to privileged activities. Although statements in this format can be presented in fiscal reports outside the company, they are not in tended or true as substitutes for traditional format financial statements in submissions to the governing body because they are not consistent with the formalities of chiefly accept Accounting Principles (GAAP). The expenses shown on page 50 that step front to have been reclassified as variable selling costs on page 33 are Distribution and transport (€29,988,000) and make sales commission (€73,573,000).

These appear to be the ones reclassified because: (1) they are twain variable costs; (2) they add up to €103,561,000, almost scarcely (rounding wrongdoing only) €104,000,000; and (3) Selling, gener al and administrative expenses of €539,797! ,000 (on page 50) is almost scarce €104,000,000 greater than General and administrative expenses of €436,000,000 (on page 33). 2) Cost of gross sales is include in the computation of contribution margin in the statement on page 33 because the contribution margin emphasizes cost behavior and the Cost of Sales is characteristic of a...If you penury to sign up a full essay, order it on our website: OrderEssay.net

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