Cost Control Analysis for Zucesa Juices
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ScribdTranslationsCost Control Analysis for Zucesa Juices
Translated by
ScribdTranslationsMASTER IN FINANCE AND CORPORATE FINANCE
MODULE:
COST CONTROL
ACTIVITY:
PRACTICAL CASE - ZUCESA
ALUMNO:
HUMBERTO ALONSO RICO SÁNCHEZ
STUDENT ID:
4306005645
22 DE AGOSTO DE 2021.
CASE DEVELOPMENT
Cenete Juices S.A.
The company's primary business line is the distribution of juices at the level
national to large consumers of the HORECA channel (hospitality, restoration and
cafeterias), to which it offers orange juice in containers of 1.5, 5, and 35 liters.
Juices were the first line of business, starting operations in 1975,
and expanding in 2010 with the purchase of industrial machinery for manufacturing
of juice, the purchase of said machinery is made directly from the manufacturer in
Romania, from where it is imported. Upon receipt of the containers with the
unpackaged machines, the company checks their operation, makes a
quality control and packaging and labeling with the ZUCESA label.
As a complement to the sale of the machinery, the company itself carries out the
technical support tasks for the machinery.
It is requested:
1. Determine the Break-even Point for each line of business, assuming that
The unit price of juices and machines is €1.
Break-even point = Fixed costs / Unit contribution margin
The break-even point indicates the level of activity necessary to cover fixed costs.
It is the number of units that need to be sold to cover fixed costs.
Machinery
Juices Hospitality
Total sales 1,900,000.00 € 800,000.00€
Total costs 1,450,000.00 € - 880,000.00€
Total variable costs - 1,000,000.00 € - 480,000.00€
Fixed Costs - 450,000.00€ - 400,000.00€
Result 450,000.00€ - 80,000.00€
Dead End: 950,000 1,000,000
Fixed Costs - 450,000.00€ - 400,000.00€
Unit contribution margin. 0.47368€ 0.40000€
Unit selling price 1.00 € 1.00 €
Units sold 1,900,000 800,000
Variable unit cost 0.5263€ 0.6000€
2. What should the sales be to achieve a profit of €500,000 in each?
of the business lines?
Machinery
Juices Hospitality
Total sales 2,005,556.00 € 2,250,000.00 €
Total costs - 1,505,556.00 € - 1,750,000.00 €
Costos variables totales - 1,055,556.00 € - 1,350,000.00 €
Fixed Costs - 450,000.00€ - 400,000.00€
Result 500,000.00€ 500,000.00€
Dead Point: 950,000 1,000,000
Fixed Costs -450,000.00 € -400,000.00 €
Unit contribution margin. 0.47370€ 0.40000€
Unit selling price 1.00 € 1.00 €
Units sold 2,005,556 2,250,000
Variable unit cost 0.5263€ 0.6000€
Result 500,000.00€ 500,000.00€
Variable cost 0.5263€ 0.6000€
Fixed costs -450,000.00 € -400,000.00 €
Sales-Total costs=Result 500,000.00€ 500,000.00€
(Units*1Euro)-(Fixed Cost)-(Units*CUV)=500000
Units
0.47368 U = 950000 0.4U=900000
Units*CUV=500000+Fixed Cost
Units-Units*CUV 0.47370€ 0.40000€
Unidades= 2,005,556 2,250,000
3. The company is launching its juices in a new European market, and
to improve consumer knowledge about the product it is decided
to carry out a television campaign whose cost is linked to sales, with a
14.75% of the annual sales of that line of business, what will it be
the new PM?
Juices
Total sales 1,900,000.00 €
Total costs - 1,730,250.00 €
Total variable costs - 1,280,250.00 €
Fixed Costs - 450,000.00€
Result 169,750.00€
Deadlock: 1,379,588.5438
Fixed Costs - 450,000.00€
Margin unit contribution. 0.32618€
Unit selling price 1.00 €
Units sold 1,900,000
Costo variable marketing 280,250.00€
Variable unit cost 0.6738€
4. Why is it riskier to finance a company's assets with debt?
What about with your own resources?
By financing the company's assets with debt rather than equity, one
assume an additional fixed cost. The cost structure that the company assumes is
a management decision, which has its advantages and disadvantages. For example, when
assume higher fixed costs in cases where sales drop for whatever reason
it is more likely to be below the Breaking Point, while when the
The number of units sold increases due to a favorable economic cycle or of
market, the profits are much greater. Although financial leverage
it involves a greater risk, it is also widely assumed for the benefits in the
which is redundant.