Managerial Accounting

Use the following example for Question 1 & 2
Two retail clothing stores have the following data:
(Million)               Caril- Clothing                  Debi- Duds
Sales                     $17                                      $78
Variable costs      10                                       50
Fixed costs          __4                                   __22
Net income             3                                          6
1. Calculate the percentage change in each retailer net income if sales fall by 35%.
 
2. Which retail store has more operating leverage? Explain your answer.
 
3.  Explain Opportunity Cost of Capital.
 
4. Describe the 5 basic building blocks of Organizational Architecture. Please provide practical examples.
 
5. Explain the difference between Decision Management and Decision Control. Please provide practical examples.
 
6.  Please use this table to answer Question 7.
2010                          2011 (in millions)
Subsidiary net income
                  8.0                      8.3
Total  assets in subsidiary
                  85                       95
Return on net investment in subsidiary
                 21%                     22%
Critically evaluate the performance of this subsidiary.
 
7.  Explain the concept of bottom up budgeting. Please provide practical examples.
 
8. Explain the 3 reasons to allocate costs using practical examples.
 
9.  Please explain joint costs using practical examples.