DUNCAN SHIRT

Accounting Case: Duncan Shirt

Duncan Shirt Company

TO: CEO

FROM: Student

Subject: Recommendation to Duncan Shirt Company on current situation and potential future developments.

Thank you for giving me an opportunity to analyze the current situation and potential future developments of Duncan Shirt Company. The following is the result of analyzing the Duncan Shirt Company financial structure.

Income statement using the traditional method for the Duncan Shirt Company

Product and Customer Statistics 2012

Size

Priority

Team

Shop

Total

X-Large

272, 500

166, 000

105, 500

544, 000

Large

366, 000

186, 000

103, 000

655,000

Medium

360, 000

190, 000

960, 000

1, 510, 000

Total sold

998, 500

542, 000

1, 168, 500

2 ,709, 000

 

 

Turnover

$ 6, 029, 700.

$ 3, 284, 300 $ 6, 566, 900

$ 15, 880, 900

 

 

Number of units painted

750, 000

400, 000

550, 000

1, 700, 000

Number of units billed

698, 500

472, 000

1, 138, 500

2, 309, 000

Number of units embroidered

300, 000

70, 000

30, 000

400, 000

 

 

Number of orders received

2, 330

11, 450

57, 909

71, 689

Number of shipments made

1, 470

9, 230

49, 286

59, 986

Fees & revenues 2011

Size

Quantity

Sales Mix

Standard price

Direct labor costs

Direct material costs

Overhead

Total

X-Large

544, 000

20%

$ 6.60

$ 0.40

$ 0.60

$ 0.24

$ 1.24

Large

655, 000

24%

$ 6.20

$ 0.35

$ 0.55

$ 0.21

$ 1.11

Medium

1, 510, 000

56%

$ 5.45

$ 0.30

$ 0.39

$ 0.18

$ 0.87

Total

2 , 709, 000

100%

$ 2, 715, 310

 



 

Adjustments

Quantity

Direct costs (unit)

Conversion cost

Total cost

 

 

 

 

 

 

 

Dyeing

1, 700, 000

$ 1.40

N/A

$ 2, 380, 000

62%

 

Stamping

2, 309, 000

N/A

$0.40

$ 923, 600

24%

 

Embroidery

400, 000

N/A

$1.30

$ 520, 000

14%

 

 

$ 3, 823, 600

100%

 

 

 

Size

Contribution by product

Sales Mix

 

Production

Contribution

 

 

 

 

 

 

 

 

X-Large

$ 5.36

$ 0.20

$ 1.08

$ 544, 167

$ 2, 916, 739

 

Large

$ 5.09

$0.24

$ 1.23

$ 655, 201

$ 3, 334, 978

 

Medium

$ 4.58

$ 0.56

$ 2.55

$ 1, 510, 465

$ 6, 917, 932

 

Total

$ 15.03

$1.00

$ 4.86

$ 2, 709, 835

$ 13, 169, 650

 

Total cost

$ 13, 169 ,650

 

Total production

$ 2, 709, 835

 

 

 

 

 

 

Profit and loss

 

 

 

 

 

Revenues

 

 

X-Large

$ 3, 591, 507

 

 

Large

$ 4, 062, 252

 

 

Medium

$ 8, 232, 038

 

 

Total

$ 15, 885, 797

 

 

 

 

 

Cost

 

 

Production

$ 2, 716, 147

 

 

Switching costs

$ 3, 823, 600

$ 6, 539, 747

 

 

Gross Profit

$ 9, 346, 050

 

 

 

 

 

Selling and distribution costs

$ 5, 761, 600

 

 

Administration

$ 3, 584, 450

$ 9, 346, 050

 

 

Total

$ 0

 

 

Using ABC, provide a detailed report for the profitability of each of the three customer groups: Priority, Team, and Shop

Product & Customer Statistics 2012

Turnover

Priority

Team

Shop

Total

Size

X-Large

$ 272, 500

$ 1, 798, 500

$ 166 ,000

$ 1, 095, 600

$ 105, 500

$ 696, 300

$ 544, 000

$ 3, 590, 400

Large

$ 366, 000

$ 2, 269, 200

$ 186 ,000

$ 1, 153, 200

$ 103, 000

$ 638, 600

$ 655, 000

$ 4, 061, 000

Medium

$ 360, 000

$ 1, 962, 000

$ 190 ,000

$ 1, 035, 500

$ 960, 000

$ 5, 232, 000

$ 1, 510, 000

$ 8, 229, 500

Total sold

$ 998, 500

$ 6, 029, 700

$ 542 ,000

$ 3, 284, 300

$ 1, 168, 500

$ 6, 566, 900

$ 2, 709, 000

$ 15, 880, 900

 

 

 

 

 

 

 

 

 

Cost

Priority

Team

Shop

Total

Direct material costs

X-Large

-

$ 163, 500

-

$ 99, 600

-

$ 63, 300

-

$ 326, 400

Large

-

$ 201, 300

-

$ 102 ,300

-

$ 56, 650

-

$ 360, 250

Medium

-

$ 140, 400

-

$ 74, 100

-

$ 374 ,400

-

$ 588, 900

Total material cost

 

$ 505, 200

 

$ 276, 000

 

$ 494, 350

 

$ 1, 275, 550

 

 

 

 

 

 

 

 

 

Direct labor

 

 

 

 

 

 

 

 

X-Large

-

$ 109, 000

-

$ 66, 400

-

$ 42, 200

-

$ 217, 600

Large

-

$ 128, 100

-

$ 65, 100

-

$ 36, 050

-

$ 229, 250

Medium

-

$ 108, 000

-

$ 57, 000

-

$ 288, 000

-

$ 453, 000

Total labor

 

$ 345, 100

 

$ 188, 500

 

$ 366, 250

 

$ 899, 850

 

 

 

 

 

 

 

 

 

Overheads

 

 

 

 

 

 

 

 

X-Large

-

$ 65, 400

-

$ 39, 840

-

$ 25, 320

-

$ 130, 560

Large

-

$ 76, 860

-

$ 39, 060

-

$ 21, 630

-

$ 137, 550

Medium

-

$ 64, 800

-

$ 34, 200

-

$ 172, 800

-

$ 271, 800

Total ...