Fluent Essays

Instructions Please note:  All information required for this assignment is provided in the Unit 3 Student Workbook [Excel] for this unit. Read the Fashion Designs International, Inc. [PDF] case study and complete the following requirements. Quantitative Analysis:  Based on the information presented in Tables 1 and 2, calculate the following: Calculate Total Variable Costs. Calculate Total Fixed Costs Calculate Contribution Margin per Unit Calculate Break-Even, Unit Sales Calculate Target Profit Qualitative Analysis:  In a 2-3 page report, based on your quantitative analysis, what do you think FDI should do with its production: continue in North America or move it overseas? Discuss the quantitative, qualitative, and ethical factors, if any, that come into play with this decision.  Support your recommendation with a minimum of 3 academic resources. Deliverables Quantitative Analysis (Excel Required): You are required to use the provided Excel workbook to complete the quantitative analysis for this assignment. Qualitative Analysis (Word Required): Prepare a 2-3 page summary addressing the required qualitative analysis, as noted in the Student Workbook.  Your paper is required to be formatted according to APA requirements.  Be sure to incorporate key concepts from this units readings and properly cite your references according to APA requirements.  Do NOT embed the results of your quantitative analysis in your Word document.  You should only reference parts of your quantitative analysis in your written analysis.  Your written responses to the qualitative prompts should not be presented in a question and answer format.Case Study Data Table 1 Fashion Designs International, Inc. Comparative Income Statements year ended December 31, 2014 2015 2016 Sales $1,987,050 $2,124,885 $2,249,830 Cost of Goods Sold: Fabric 237,250 250,390 264,260 Cutting 201,500 212,660 224,440 Sewing 260,000 274,400 289,600 Brand labels 3,900 4,116 4,344 Thread etc. 650 686 724 Shipping and freight 29,250 30,870 32,580 Total Cost of Goods Sold 732,550 773,122 815,948 Gross Profit 1,254,500 1,351,763 1,433,882 Operating Expenses: Bank charges 1,260 1,260 1,320 Salary expense 350,000 360,000 370,500 Wage expense 263,250 291,722 323,275 Employee benefits - salaried employees 63,000 64,800 66,690 Employee benefits - hourly employees 31,590 35,007 38,793 Insurance 22,450 22,450 23,124 Information Technology services 8,220 8,340 8,520 Legal fees 15,000 18,840 20,280 Licenses and permits 5,400 5,400 5,400 Meals and entertainment 14,304 15,019 15,925 Printing and reproduction 1,452 1,740 1,860 Professional Fees 15,504 16,260 16,920 Marketing and promotion 30,996 34,104 30,996 Rent - Office 36,996 36,996 37,380 Rent - Warehouse 41,004 42,234 42,234 Repairs and maintenance 8,592 7,380 10,188 Security expense 2,100 2,100 2,184 Office supplies 2,136 2,532 2,844 Telephone and internet 2,472 2,604 2,808 Vehicle expenses 5,760 5,875 6,051 Travel expenses 21,000 21,210 21,846 Utilities 1,956 2,034 2,156 Total operating expenses 944,442 997,907 1,051,295 Profit before taxes 310,058 353,856 382,587 Income taxes 93,017 106,157 114,776 Profit after taxes $217,041 $247,699 $267,811 Table 2 Fashion Designs International, Inc. Assumptions for Income and Expense Projections Expense Item F/V (1a) Formula 2016 amount (1b) Projected annual growth Effect of overseas move Cost of Goods Sold: Fabric (2) V units sold (6) x VC per unit $7.30000 3.00\% -50\% Cutting (2) V units sold (6) x VC per unit $6.20000 3.00\% -50\% Sewing (3) V units sold (6) x VC per unit $8.00000 3.00\% -50\% Brand labels (4) V units sold (6) x VC per unit $0.12000 3.00\% -50\% Thread etc. (1) V units sold (6) x VC per unit $0.02000 3.00\% -50\% Shipping and freight (5) V units sold (6) x VC per unit $0.90000 3.00\% 300\% Operating Expenses: Bank charges F fixed monthly cost x 12 $1,320 1.5\% 0\% Sal exp - owner F fixed annual cost x 1 $150,000 0.0\% 0\% Sal exp - employees F fixed annual cost x 1 $220,500 2.0\% 0\% Wage expense V units produced x VC per unit $8.93025 2.0\% -20\% Emp benis - sal F salary expense x percentage $66,690 same \% 0\% Emp benis - hrly V wage expense x percentage $1.07163 same \% 0\% Insurance F fixed annual cost x 1 $23,124 1.5\% 250\% IT services F fixed monthly cost x 12 $8,520 1.5\% 0\% Legal fees F fixed monthly cost x 12 $20,280 1.5\% 200\% Lic & Permits F fixed monthly cost x 12 $5,400 1.5\% 75\% Meals and entertainment F fixed monthly cost x 12 $15,925 1.5\% 0\% Printing and reproduction F fixed monthly cosAdapted from IMA IMA EDUCATIONAL CASE JOURNAL VOL. 11, NO. 4, ART. 2, DECEMBER 2018 ISSN 1940-204X Fashion Designs International, Inc. George Gonzalez, PhD, Assistant Professor Accounting University of Lethbridge–Calgary Campus Calgary, Alberta, Canada INTRODUCTION “Balancing quantitative and qualitative factors can be quite a challenge,” Charles Riley thought to himself. Riley is the CFO of Fashion Designs International, Inc. (FDI), a small women’s apparel business. The CEO and sole shareholder of FDI, Alina Rossi, had asked Riley for suggestions about how to increase the company’s profits to the level that matched her financial goals. Riley knew, however, that there were qualitative factors of importance to Rossi that posed challenges. FDI, based in Greensboro, North Carolina, manufactures and distributes women’s apparel to retailers worldwide under the brand name RossiDesigns. Headed by Rossi, an Italian-educated, award-winning fashion designer with a high work ethic and a perfectionist streak, the company’s products are considered of excellent quality by consumers and retailers. The designs, fabric, and processes used in production all contribute to this high level of quality. Since its inception in 2001, the company has grown steadily to annual sales of US$2.25 million in 2016 (see Table 1). ALINA ROSSI, FASHION DESIGNER Alina Rossi studied fashion design in Italy and, upon completing her studies, moved back to the United States where her family had emigrated when she was 10 years old. Rossi was a highly creative designer who almost certainly could have done well by selling her designs to large international fashion companies but chose instead to start her own company. Rossi started her fashion business in 2001 by selling women’s apparel to small U.S.-based boutique shops. Her designs—particularly popular with women in their 20s, 30s, and 40s—sold quickly, and her business grew accordingly. After several years, her market expanded to include Canada, Mexico, and a few countries in Europe. Rossi tends to be a perfectionist both with her designs and in her insistence on high production quality. This manifests itself in her close supervision of production processes, to a point of near-obsession with ensuring the high apparel standards that she demands. APPAREL PRODUCTION The production of FDI’s products is composed of three major phases: (1) manufacturing the fabric to be used for apparel pieces, (2) cutting the fabric according to the particular apparel piece’s design, and (3) sewing the cut fabric into apparel wear. FDI’s women’s outfits are made from high-quality fabric, which Rossi specifies to the fabric manufacturer, a company based in Toronto, Ontario, Canada. Large rolls of fabric manufactured for FDI are shipped to FDI’s warehouse in Greensboro, where they are stored until ready to be used in production runs. At such time, fabric is sent to the cutting shop where the fabric is cut into l