Rhetorical Strategies Essay Example | Topics and Well Written Essays - 1250 words

Rhetorical Strategies - Essay Example These error patterns are â€Å"deal breakers† – I cannot see them in your work if you want to pass the course because they demonstrate to me your inability to control your own sentences, a core skill you need to have mastered upon entering English 101A. As I’ve suggested in the past, you should be working with a tutor regularly, and you should consider (re)taking English 846 (which focuses on sentence building and communicative fluency in your writing) before attempting a course at this level again, alright? I can’t pass this work, nor do I expect to be able to pass you in the course at this point given what I’m seeing here. You may rewrite if you wish. You’ll have two weeks to submit a revision via email. Assignment & Proofreading 1/4 Thesis 2/4 Focus & Clarity 2/4 Development & Support 3/4 Language & Mechanics 1/4 Late (2 pts = -10%) -/20 Total 9/20 ________________________________ 20 = 100% A 15 = 75% C 19 = 95% A 14 = 70% C- 18 = 90% A- 1 3 = 65% D 17 = 85% B 12 = 60% D- 16 = 80% B- 11 = 55% F *Please see the Grading Rubric Explanation found within the course for a detailed description of the numbers and criteria on the grading grid each of the component marks above corresponds to. *If this essay is marked as a late submission, either because it missed its deadline or was not in an acceptable form at the time of submission, it is ineligible for the rewrite option and this grade will stand as the final mark for the essay. This policy is laid out clearly in the Course Syllabus. Please apply these grading marks and comments to your next essay work instead. Difficulties of Crossing the Line Award-winning journalist Ruben Martinez effectively demonstrates the difficulties of crossing the boundary between Mexico and America in â€Å"The Crossing†, a selection in Reading America. Martinez’ mother is from El Salvador and married to a Mexican American. His parents merge with American culture yet maintain their M exican heritage with frequent family visits to relatives in Mexico. Martinez claims both his Mexican and American backgrounds, and recalls early visits to Mexico in his story. His memories of leaping back and forth between the two counties comprise the foundation of his childhood. Through his recollections, Martinez highlights the importance of the border line as a boundary full of historical and economic heritage. Many people want to cross from Mexico to America, and the line acts like a sieve—catching some people, but letting others through. Many unpredictable events, like death, can occur to people crossing the boundary, and people’s reasons for wanting to make the journey are countless. The author recounts the story of Victor, an illegal immigrant who has diabetes. Victor is attempting to cross the border line from Mexico to America to find his sister. He hopes for a good life, and believes America can offer better treatments for his medical condition than what Mex ico can offer. The author’s memories convey the truths about crossing the border, and the difficulties of passing through it. Martinez creates pathos by telling about his experiences and those of others he met while traveling across the border. He considers himself an American today because the expansion of

Final Project- Step Two Assignment Example | Topics and Well Written Essays - 750 words

Final Project- Step Two - Assignment Example A good example is the use of a well labeled diagram to explain the internal working structure of the human ear in a biology class. This is more effective than the verbal version of the same information. This shows that visual representation of information is more effective due to the fact that more senses of an individual are involved when information is passed using visuals (Dartmouth, 2010). This message is very important and everyone should be able to know that the use of visuals in learning and other processes of information sharing are more effective. However, this message is specially intended for various educators. Teachers and other educators have a special and vital role of passing information to the students. It is therefore very important that they realize the value of visuals in passing on the knowledge that they have to their students. Teachers responsible for students in their early stages of education are encouraged to use a lot of visuals as this helps in developing t he senses of the child and make them understand things much better. Students to should read and understand this message. They need o realize that when reading, using visuals to read and understand a particular subject is much practical and easier as compared to the theoretical use of words without any visuals (Dartmouth, 2010). ... The main tone that I want this project to achieve is the active tone. This is a very professional tone that clearly brings out the value of a message to the audience. This therefore means that the language to be used has to be active and passive only in relevant places. I will use various visuals to support my message by involving many of them in the learning process and weighing out the most effective method between the use of visuals and other instances when visuals are not used. This is done by examining different intermediate students by using words and visuals. After this, the results are compared to confirm whether the visual techniques are most effective. I will bring in diagrams that are relevant to the topic of discussions and ask people to weigh out the most effective method that brings out the message clearly (Dartmouth, 2010). Visuals will therefore have an important role in the passing of the message. The main platform that I intend to use to communicate my message is Mi crosoft power point. As the name suggest, Microsoft power point is a very important tool in learning. With this application, one is able to embedded visuals, music and even words. It is therefore an effective way of bringing in the visuals into a real life scenario. This application not only involves the students in words but also uses visuals to accompany this message. It is for this reason that the students get engaged in the activity. Since this is a visuals message, power point is even more effective. Practically, power point is refreshing and breaks down the monopoly of boring classes due to the presence of visuals that are used in the application. The points are also short and direct and as a result ensure that the message is passed within a short time and I an efficient

Tescos Market Position Analysis

Tescos Market Position Analysis This is a report on Tesco PLC which is one of the largest grocery and general merchandising retailer in the UK and in other countries around the world. Tesco is the third largest retailer in the world; the first two largest retailers are wall-mart which is also known as Asda in the UK and Carrefour which is a French international retail organisation. Tesco is the 2nd largest retailer in the world in comparison of profits which is leaded by Wal-Mart. This report looks at the organisation on how it was formed to how it has become successful around the UK and the rest of the world. Tesco is a highly reputable organisation which has been growing over the last 8 decades and is still growing. Tesco is a highly profitable organisation and evidence has been shown of this in this report. In this report I will use a range of models and strategic analysis both internal of the organisation and externally as well as strategy formulation. I this report I have use a rage of model and tool to demonstrate what TESCO is all about. Tescos has over 4,330 stores around the world but mainly around the UK. In this report I have used the strategic tools like PESTEL, Porters Five Forces, SWOT analysis and a value chain analysis. 2. Background how and when TESCO was introduced and its current position in the market Tesco initial was founded by Jack Cohen early in the 1920s. The brand was initially named when jack Cohen bought a shipment of tea from T.E.Stockwell and by using the initials of T.E.Stockwell Cohen added the first two letter of his surname to create the brand TESCO. The first Tesco was open in 1929 in the north of London in the area of Brunt Oak. Tesco first started by selling food and drinks and over the year has diversified its product range from clothing, insurance, telecommunications and retailing and renting DVDs to online services like music download and software. The organisation has also diversified geographically as it is a well known brand around the UK which was the primary focus to the rest of the world and is now operating in 14 major countries around the world. TESCO is on the London stock exchange as the FTSE 100 Index which shows Tesco is one of the 100 most capitalised organisations in the UK. In 2009 Tescos has staggering revenue of 54biillion and the organisation employs over 472,000 employees worldwide. Tesco have over 960 Tesco express stores around the UK which sell around 7,000 products which include fresh food around the Tesco express local stores. Tesco also has around 170 metro stores which sell a diverse range of food products around city centres. Tesco currently has over 450 superstores which Sell all their product rage including services such as DVD rental and Tesco Mobile. Tesco provides financial services called Tesco Personal Finance (TPF) as well as providing broadband internet connections.  The position of Tescos in regards to shares with other market leaders have been put into a PIE chart below: Market share Tesco ASDA Sainsburys Morrison Others % of market share 30.60% 16.60% 16.30% 11.10% 25.40% Fig 1: Share of leading organisations in UK Food Retail Market 3. PESTEL Political With the immersion of 10 more countries in the European Union (EU) in 2004 had promoted the trades between Western and the Eastern European countries (BBC, 2009). This has allowed Tesco to expand in the retail markets around the EU. Last year it was signed off by Tesco with china that Tesco will be able to open a chain of shopping malls in China. This joint project included three main malls to be built in Qinhuangdao, Anshan and Fushan. A total of 18 hypermarkets were also expected to open this year. This information was provided by Tesco last year. The growth of the international market is on the rise and is predicted to account for 25% of the companys profit. In the Straits Times 2010 article it is motioned that due to Chinas accession with the World Trade Organisation (WTO) it has promoted a free flow for foreign trades this was done by removing all barriers which would encourage companies from the west including Tesco to make it way to the most profitable market which would encompass over 1.3 billion people. Economic The economic factor is a point of concern for Tesco since the UK was officially declared as being in the recession in 2008. This has affected the consumers directly as they became insecure about their financial income. The buying behaviour of Tescos customers meant since the recession consumers were more selective on what they bought. The reduction of the interest rates helped in the reduction of the growth of unemployment in 2009. As a result the spending power of the consumers in on the rise again as people became more secure about their financial positions. However there is still allot of people under threat and so are likely to spend less money on the ready prepared meals, this will affect the sales value and the profit margins adversely. On a positive note in regards to the recession consumer are more likely to cook at home compared to eating out and this would have a positive effect on the amount of sales in the grocery retailers like Tescos. Consumers are less likely to cut down on food expenses instead the percentage of spending on food has risen over the years. Below is a graph showing this form Euromonitor 2010: Fig 2: The % of UK consumers spending on food from 2004 2008 The economic recession has been brought to radiance with the help of the following GDP growth graph since 1990 (BBC news 2010): Fig 3: UK GDP Growth 1990-2010 Social In an analysis UK population it shows that there are more people in the UK who are retired compared to the children in the UK. The elder generation tends to eat less and tend to travel less to supermarkets compared to the younger generation. It has been predicted that the internet shopping is more convenient to the elder generation but due to the low amounts of food required by the elder generation deliveries are less profitable. In the recent decade the number of people choosing has increased and Tesco have identified this and have increased their product range to meet customer demands. Payments by cheque and cash were 1st made achievable by Tesco. Technological One of the main macro ecological variables that have inclined the supply chain, operation and process of grocery and food retailers is technology. The operations of supermarkets are being affected by the use of services like internet shopping. Internet shopping has been growing and is still growing in the UK. The subscription of internet has developed by over 50% and it is estimated to have 70% of UK being users of the internet. (Office for National Statistics, 2010). The use of loyalty schemes which are used by online retailer helps to retain customer as people are discouraged to shop elsewhere (Sun, 2009). Online shopping is also available on phone so people can shop anywhere at any time. Due to the increase of the access of broadband internet shopping is increasing in the UK. 15.5 million Number of users is in UK who is broadband users and this account for 70% of the total market (Keynote 2010). Environmental The environmentally friendly solution of reducing packaging is promoted by the UK Government. In a study by the Office for National statistic, the number of people using reusable bags has raised by 3% from 71% to 74% and those consumers using normal bags and are trying to cut down has also increased from 65% to 68%. This has helped in reducing the cost and it also good for Tesco CSR image. Tesco has recently started adding carbon footprint data to dairy product, orange juice and potatoes and plans to expanding this data onto bread and non-food items in the future (Tesco 2010) There are customers who are reusing bags, recycling old mobile phones and aluminium cans and also prefer bagless deliveries. These customers are being awarded for their contributions through the Tescos Clubcard points (Datamonitor, 2010). Supermarket Tesco have put wind turbines on one of the stores roof this produces enough energy to run all 15 tills. Fig 4: Consumers actively being Green 2007-2010 Legal Due to the rise of the VAT in January to 20% by the government to reduce the budget deficit, Tesco non-food products will be affected such as clothing and electrical goods. In recent years the national minimum wage has been increased by 15.5% this has increased the supermarkets running and operating costs. Porters Five Forces Analysis Threat for substitute products and services In the retail market the threats for grocery retail products is low compared to non-food products. Substitute food products are available from local convenience stores and shop but are not seen as a threat for Tesco as Tesco is able to provide higher quality for lower prices due to buying power and other factors. Tesco are also opening express stores which take most of the business form local convenience stores. The threat for non food items is high as consumers are inclined to by discounted products like clothing form other retailers, however due to the recession Tescos is benefiting compared to the specialised clothing outlets. Threat of entry of new competitors Threats in the food retail industry are low for new competitors. To succeed in the food retail market a huge investment is required to be competitive against Tesco or other food retailers as the new organisation would have to build a brand name. Major retailer of food like Tesco, Asda, Morrisons and Sainsbury account for 80% of shopping for food in the UK (Mintel 2010). In order to compete against the established brads the new brad must either produce a higher quality or sell the product for lower prices or even both to be any threat to the big players. To gain permission from the local government to establish a new supermarket could take a considerable amount of time so therefore there is a key barrier for new entrant in this business. Intensity of competitive rivalry Competitive rivalry is quite high in the food retail industry. Due to the high level and the growing levels of rival market shares Tesco is at risk of losing its market leadership. All the major competitors like Asda Morrisons and Sainsbury have had an increase in the market share for 2009-2010. All the major retailers are being very competitive against each other as they are always lowering prices and promoting products. In the rural areas of the UK consumers are inclined to go to places like Somerfield and Co-op due to the distance of the major retailers. The highly discounted food products from retailer like Aldi and Lidl are inclining customers to go there especially in times of financial difficulties due to the recession. These retailers have grown by 25% during 2008. (Keynote, 2010). Bargaining power for buyers The Bargaining power for the buyer is high. Consumers are inclined to buy cheaper products and with the use of the internet for comparing product prices consumers are inclined to switch to cheaper alternatives. Where products are more standardised and have little differentiation consumers can easily switch from one brand to a different one. Bargaining power for suppliers Bargaining power for suppliers is low Suppliers are attracted to sell their products to major retailer like Asda and Tesco as the supplier would not want to lose their contacts with these major suppliers due to their selling power and so the negotiations with suppliers are strengthened and the major retailers are likely to come with a positive outcome when it comes to buying at lower prices. Detailed SWOT Analysis Below I have done a SWOT analysis for Tesco. Strengths Tesco is the 3rd largest retailer in the world. Tesco holds 30.7% of shares for the UK grocery market. In a research done by Datamonitor 2010 Tesco has a turnover of  £54 billion this in an increase of 14.9% compared to 2008. Tesco has done this by customising products and services to meet the demands of the consumers. Tesco has focused on reducing product prices without compromising on quality. Online services in the non-food retail market; Tesco Direct has seen an increase by 50% (Tesco, 2010). Tesco has retained its customer with the use of Clubcard. The information from Clubcard has been used to promote products and other promotional techniques. Fig 4: Tesco annual Growth in Key Performance Indicators Weaknesses Tesco has not performed well over the last year compared to the competitor in a report by Mintel (2010). A large number of goods were recalled which has resulted in finical loss. This has also had negative impact on the brands image. The main operations of the organisation are in the UK where it is recorded more than 75% of its revenue is generated in the UK in 2009. This was mentioned in a report by Tesco (2010). The organisation lacks geographic diversification and this shows a key weakness for Tesco to systematic risks of the UK market. Opportunities In a report by Mintel (2010) it is recorded that Tesco have opened over 620stores in 2009 and 435 of them were in international locations. The geographic growth will help the firm to improvising its economy of scale, while it is also reducing the exposure of the systematic risk. In the Guardian (2010) it is mentioned that Tesco.com has over 1 million customers, this has provided the firm to attract new customers which is helping to increase profits due to overall costs. The company is focusing in expanding geographically; this will strengthen its global market position. Tesco has signed off a new deal with Tata group which is one of the major industrial organisations based in India (Daily Mail, 2010) The food retail market is expected to grow from  £125 billion in 2009 to over  £145 billion by the year 2014 as it is important to have enough food. (Euromonitor, 2010) Threats Due to the reduction to consumers income and the rise of unemployment the buyers behaviour is affected and non-food products are being adversely affected. Tesco has been the market share leader for over 15 years and is now facing difficult times due to the intense competition of its competitors like Asda and Morrisons (Mintel, 2010). Bellow is an abridged SWOT analysis of which can be summarised in the illustration below: Fig 5: Tesco reduced SWOT Analysis Value Chain Analysis for Tesco The value chain shows the strength and weakness in the value accumulation process. The value chain for Tesco has been illustrated below: Fig 6: Value chain for Tesco Primary Activities Inbound logistics The primary stage of the value chain is where the opportunity arises to create value for the business. The first stage is known to be upstream for activities. Inbound logistics is where products are bought from the supplier and are and are handled and transported to the shelves. Tesco adds value by maintaining the level of choice while it is also improving the efficiency of distribution system. Quality control measures are taken to remove the damaged goods and reducing the cost which may be incurred to its consumers. Operations In the day to day running of the stores Tesco has to maintain its service levels by selling the products and services and making sure they are open for business in accordance to their trading hours. Tesco would have to also make sure products are available on shelves for their day to day business, this is done overnight daily. In order to keep their competitive advantage Tesco may have to consider opening more hours or even opening metro and express stores. To do this Tesco must seek permission from the council and sometimes this may not be possible, this would take away their competitive advantage. Outbound logistics Outbound logistic is the third stage of the value chain and Tesco add value by providing deliveries to customers. Tangibles such as parking facilities, trolley collection, staff at till and systems are also used to gain the competitive advantage by saving time of consumers if done properly. The implementation of trolley deposit stations and keeping them orderly helps customers to get to and from the stores premises allot quicker as well as making these facilities available to use. Marketing and sales The marketing and sales side of the value chain is more downstream. The Tesco club card provides discounts and help to keep customers loyal. Tesco also advertise on the radio, newspapers as well as TV adverts to attract customers with their pricing and promotions available. In regards to selling environmentally friendly products there are some constrains however Tesco can take advantage of this by providing products that are environmentally friendly which could help attract new customers. Support Activities Company Infrastructure To help maintain the price of the products the implementation of security systems are in place as well as anti fraud systems to prevent people acting fraudulently. To reduce costs departments such as profit protection are employed by Tesco to reduce losses. The reduction of crime and its prevention helps Tesco keeps is low prices low. Human resource management Human resource management would be regarded as a downstream activity. The job of HRM is to make sure staff are recruited and trained properly so benefits are passed to the customers. Tesco are always trying to maintain is high level of customers service by putting in programs for employees which are performance related. Employees are paid more by providing a better service to its customers and so employees are encouraged to do this. Technology development This activity is also downstream and Tescos ability to provide product ranges which are new and innovative products has to be maintained. The product vitality adds value to the brand of these products. Conclusion The report has clearly showed the success of Tescos from a small enterprise to a large PLC. Tesco success depends on their brand name which has always been evolving. Tescos brand name has hit the world like a virus but mainly in the UK. Tesco have managed to get the right message across to its consumers by making sure their CRS was to focus on their stakeholders. In order to succeed in the future Tesco has to diversify its products ranges and also diversify geographically as it has done over the last 8 decades, this will continue to create new customers as well as retaining its existing customers. Also to continue to succeed Tesco must adapt to any changes which may occur like a change in the services like broadband, BT have started to install fibre optic to increase its broadband seed. If Tesco wants to continue to grow its must adopt to all changes in real time, not only with this help retain customers as the services and products are up to date but this will also attract new customers. The strategy formulation for Tesco is to continue to learn. Large organisations like Tesco the strategy should be analysed and implemented on all levels of the hierarchy. The strategy of the different levels must be common throughout the hierarchy in order to have the competitive advantage. http://www.tesco.com/talkingtesco/retailing/Bottom of Form Top of Form Top of Form Bottom of Form

Influence of Realism on Literature :: Literature Realism

Influence of Realism on Literature After World War I, American people and the authors among them were left disillusioned by the effects that war had on their society. America needed a literature that would explain what had happened and what was happening to their society. American writers turned to what is now known as modernism. The influence of 19th Century realism and naturalism and their truthful representation of American life and people was evident in post World War I modernism. This paper will try to prove this by presenting the basic ideas and of these literary genres, literary examples of each, and then make connections between the two literary movements. Realism Modernism not only depicted American society after World War I accurately and unbiasedly, but also tried to find the solutions brought upon by the suffering created by the war (Elliott 705). The realistic movement of the late 19th century saw authors accurately depict life and it’s problems. Realists attempted to â€Å"give a comprehensive picture of modern life† (Elliott 502) by presenting the entire picture. They did not try to give one view of life but instead attempted to show the different classes, manners, and stratification of life in America. Realists created this picture of America by combining a wide variety of â€Å"details derived from observation and documentation...† to â€Å"approach the norm of experience...† (3). Along with this technique, realists compared the â€Å"objective or absolute existence† in America to that of the â€Å"universal truths, or observed facts of life† (Harvey 12). In other words, realists objectively looked at American society and pointed out the aspects that it had in common with the general truths of existence. This realistic movement evolved as a result of many changes and transitions in American culture. In the late 1800’s, the United States was experiencing â€Å"swift growth and change† as a result of a changing economy, society, and culture because of an influx in the number of immigrants into America. Realists such as Henry James and William Dean Howells, two of the most prolific writers of the Nineteenth-century, used typical realistic methods to create an accurate depiction of changing American life.

Evaluation of Soil Management Strategies in Two Named Farming Systems Essay

Evaluation of the soil management strategies in the India The more time goes past, the more man starts realising how the management and the way we threat soils is important to insure its preservation and conservation. Nowadays, around 9. 4 million hectares of soil, which represent the 0. 5% of the land present on our planet, is irreparably damaged and has no longer any biological function. In other words, it can no longer be used in any useful way to provide food or other elements to the earth’s tenants. There are though, two factors that influence soil degradation; the human factor and the natural one. The most impactful one is the human one, as we tend to create disequilibrium in the rate at which soil forms and at which it is eroded or degraded. This is due to the fact that farmers work the soil too frequently or misunderstand and mismanage their lands. On the other hand, erosion and degradation, which embody the natural factors, are part of nature’s cycle and over time, they do not create imbalances. In poorer countries, farmers use subsistence farming and they are in a way constricted to do so, as they not only lack of economical resources to buy machinery and conditioners, but also because the quality of the soil often doesn’t give them the opportunity to be able to work the land more intensively. In the regions of West Bengal located in the northwest of India to take an example, the density of the population is so high that farmers only can use their little land holding to produce enough in order to feed themselves and their families. This way of managing the soil is called subsistence farming and is also used in the entire southeast of India, where the soil is so degraded that the population has no other choice but to use this agricultural strategy named sedentary farming. It involves farming always at the same place, living there and getting crops relying uniquely on labour and not on any capital investments. In India we can find a very large division, varying from economical to socio-political, and even agricultural. Up in the Northwest of India, within the hills of Jaipur in Rajasthan, intensive commercial farmers are predominant as the country represents the fourth biggest agricultural power of the world. The practices and components involved in intensive farming are harmful to the soil because farmers take advantage of the resources that are available and often abuse their terrain in such way that it harms it, leading to an increase of the rate at which the land is deteriorated. But not all methods are harmful to Nature; the method used in the forests of north India by the poorer citizens has a much better environmental impact than the industrial one used by richer farmers. As equally common, this method is called shifting farming which consists in burning a piece of land so that the ashes fertilise the soil. Then the famer grows its crops for around 2 to 5 years, until the soil’s fertility starts to decrease so he moves to another place repeating the same process. After a break more or less long 10 years, the farmer can go back to the first place as the terrain supposedly had time to regain its fertility and he can so for cultivate his crops again. In fact, the material and gears used, plus the methods are much different one from another. Within the subsistence one, natural fertilizers will be more likely to be used while on the intensive one, chemicals and heavy machinery often take the lead. These different strategies used to manage the soil comprise advantages and disadvantages, to both the farmers and the land. The sustainable farming strategy is on the short term less beneficial to the farmer as it will limit his production. But this technique won’t make any harm to the soil because the method used is less intensive, and natural fertilisers such as animal rejections and organic wastes replace chemicals and fertilizers used in the intensive method. But as stated above, India is the fourth largest agricultural force on this planet and that’s when the management of the soil starts becoming problematic in accordance to its sustainability and the preservation of its quality. The choice of a farmer to opt for a specific technique rather than another relies on the income on a short period of time. Even though in India this choice mainly depends on the financial resources available, the farmers using subsistence farming will be able to use their land for a much longer period of time than those who use intensive farming. It’s also in the farmer’s benefit to use its field in a sustainable way; for environmental ssues as well as for its personal profit as on the longer term, a farmer who farms on its land in a sustainable way will be able to get an equal amount of crops over a larger period of time. To conclude, if we keep abusing the soil as they still do in certain parts of the world, by 2050 we will severely lack of available healthy soil to satisfy our needs as a result of the population’s growth rate. And even though the governments and citizens didn’t realise that before severe issues and frightening statistical data came out from the topic. We know how to prevent soil erosion from natural factors by simply planting grass or other clumping vegetation; building shelter belts and hedgerows are other examples. We can also improve the methods of cultivation, using the techniques of terracing and contour ploughing. But to prevent the abusing human activity like deforestation, I believe that the only answer is the willing and devotion of individuals of using proper pesticides and fertilizers.

Cost Volume Profit Essay

Some things we know: The objective of every business is to make money (profit) for the owners Profit = Revenues – Expenses Revenues = Sales = Quantity sold x price per unit Expenses = the costs related to: the specific revenue (COGS) or the specific accounting period Matching Principle Role of Management is: Planning, control and performance measurement, and decision-making Decision-making relates to future events and involves risk Full costing (full-absorption costing) is a good historical tool but may not Be the best indicator of future activity because it is based on past events. Cost Behavior Variable Costs – total dollars change with volume, Cost per unit is constant Fixed Costs – total dollars are constant, cost per unit changes with volume Mixed Costs – include some variable costs and some fixed costs Total Cost = Fixed Costs + Volume(variable cost per unit) Fixed Component Variable Component Purely Fixed $25,000$ 0 Purely Variable 0 5.00 per unit Mixed Costs 10,000 2.00 per unit Total Costs $35,000$7.00 per unit Graphing Total Costs X axis (horizontal/across) = volume Y axis (vertical/up & down) = dollars Estimating the Composition of Mixed Costs Account Analysis Scattergraph – Visual inspection of plotted points High-Low Estimation Theory: The change in total costs between the high volume point and The low volume point, must be purely variable costs Linear Regression (computer assisted scattergraph) Contribution Margin Income Statement Ignores the function of the expenses Focus is on cost behavior (fixed and variable) Used extensively in forecasting future potential outcomes (planning & decision making) Because Profit = Revenue – Expenses(Costs) Where: Revenue = Volume x price per unit AndTotal Costs = Fixed Cost + (Volume x Variable cost per unit) Therefore: Volume x price per unit Less Volume x variable cost per unit Less Fixed costs Profit Revenue Less Variable Costs CONTRIBUTION MARGIN Less Fixed Costs Pretax Profit KNOW THIS FORMULA FRONTWARDS AND BACKWARDS Margin of Safety = the difference between the expected level of volume and the break-even point (normally using sales dollars but could also use units sold). When comparing two or more alternatives it may be helpful to look at the Margin of Safety as a percentage of sales. Contribution Margin Ratio = CM per unit / Selling Price per unit OrContribution Margin / Sales Operating Leverage = Fixed Costs / Contribution Margin Or Contribution Margin/Pretax Profit Cost-Volume-Profit (CVP) Analysis Break-Even Point = the point at which profit = zero (i.e. we break even) = The point at which Contribution Margin = Fixed Costs Once we know the break-even point, we can begin to plan for target profit Target Pre Tax Profit versus Target After Tax Profit Pretax Profit$100 Less Tax Expense 40 After Tax or Net Profit$ 60 Effective Tax Rate = Tax Expense / Pretax Profit(40% above) Tax Expense = Pretax Profit x Effective Tax Rate Net Income = Pretax Profit x (1- effective tax rate) Pretax Profit = Net Profit / (1- effective tax rate) Multiple Product CVP Analysis Weighted-Average Contribution Margin (also referred to as blended average) PRODUCT MIX IS CRITICAL Product 1Product 2Total Units Sold10020 Selling Price$10.00$50.00 Variable Costs 5.00$30.00 Sales$1,000$1,000$2,000 Contribution Margin 500$ 400 900 CM Ratio 50% 40% 45% SO LONG AS THE PRODUCT MIX REMAINS AT 5:1 THE PROJECTED CM RATIO WILL STAY AT 45%. Therefore if sales are expected to be $20,000, AND WE SELL 5 of Product 1 for every 1 unit of Product 2, Contribution Margin should be $9,000 ($20,000 x 45%) However if sales of Product 1 are only $1,000 and the remaining $19,000 are sales of Product 2 the Contribution margin is only $8,100 and the CM Ratio drops to 40.5%. $ 1,000 x 50% = $ 500 plus$19,000 x 40% = $7,600 $20,000 $8,100 = 40.5% of sales or (1/20 x .50) + (19/20 x .40) .025 + .38 = 40.5% When computing the Weighted-Average Contribution Margin USE SALES DOLLARS as the weighing factor (NOT UNITS). Constraint = a limitation of resources To maximize profits given a limited resource, produce the product that generates the highest contribution margin per limited resource. This may not be the product with the highest contribution margin ratio. Illustration: A company manufactured two types of beer, premium and regular. Both types of beer are brewed in the same kettles. A regular batch brews for 15 days and yields 12,000 bottles. A premium batch brews for 30 days and yields 12,000 bottles. Regular beer sells for $1.00 per bottle and has variable costs of $0.40 per bottle. The premium sell for $1.50 per bottle and has variable costs of $0.50 per bottle. Assuming unlimited demand of both products, which product should the company brew? PremiumRegular Per Batch: Sales$15,000$12,000 CM$12,000$ 7,200 CM % 66.67% 60.00% CM per Limited Resource (Days) CM$12,000$ 7,200 Divided by days 30 15 CM per day of limited Resource use $400 $480 Regular beer has a higher CM per limited resource. Therefore, given unlimited demand of both types, produce only regular. Proof: In 30 days we can make one batch of premium, which will yield $12,000 in CM. In the same 30 days we can make 2 batches of regular, which will yield $14,400 in CM. We are in business to make money for the owners, not percentages. You can’t deposit percentages in the bank!