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 are as follows. The most important distinction is that the income statement on page 33 is presented in the contribution nest format, captivate that on page 55 is presented in the traditional usable approach format. Essentially, the contribution approach divides comprises between those that argon unsteady (pre-contribution tolerance) and those which are fixed, with respect to activity. In contrast, the traditional approach separates cost by their source (operational areas), e.g. production, administration, sales etc., regardless of whether they are variant or fixed. The contribution approach is particularly blue-chip as a management tool for planning, control and decision-making connect to national activities. Although statements in this format can be presented in monetary reports outside the company, they are not inte nded or authoritative as substitutes for traditional format financial statements in submissions to the administration because they are not consistent with the formalities of chiefly real Accounting Principles (GAAP). The expenses shown on page 50 that step frontwards to have been reclassified as variable selling costs on page 33 are Distribution and transport (€29,988,000) and piggish sales commission (€73,573,000).

These appear to be the ones reclassified because: (1) they are some(prenominal) variable costs; (2) they add up to €103,561,000, alm ost merely (rounding wrongdoing only) €1! 04,000,000; and (3) Selling, general and administrative expenses of €539,797,000 (on page 50) is almost just €104,000,000 greater than General and administrative expenses of €436,000,000 (on page 33). 2) Cost of gross revenue 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 deprivation to sign up a full essay, order it on our website: OrderCustomPaper.com

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