To critically think: Determine if the four students (A, B, C, D) use any of the control mechanisms i.e. Feedback Control, Financial and Budgetary Control. Introduction: Feedback control is a mechanism which is used to efficiently meet strategic goals by monitoring and observing the organization’s activities and using feedback as a measure to account for whether the firm’s performance has met the established standards. Financial control suggests the mechanism built in observing the organization’s financial performance and position. The theory proposes that not only managers have to fraternize the financial position, but also employees; through which open-book management was introduced. Budgetary control is the process of setting target on business expenditure and in response, try and remain within that target. At the end of the period, the actual expenditure will be compared against the budgeted expenditure and required changes will be made accordingly.

Question

Lexi Inc. has a single product, whose selling price is $250 and whose variable cost is 72% of sales price. The company’s monthly fixed expenses are $60,000. Assume a 40% tax rate. Required: 1. Using the equation method, compute the unit sales that are required to earn a target before-tax profit of $20,000. (Round your intermediate calculations and round up your final answer to the next whole number.)2. Using the contribution margin approach, compute the dollar sales that are required to earn a target before-tax profit of $25,000. (Round your intermediate calculations to nearest whole dollar amount.)

Answer 1

Question

Chapter 15, Problem 6AL

Summary Introduction

To critically think:

Determine if the four students (A, B, C, D) use any of the control mechanisms i.e. Feedback Control, Financial and Budgetary Control.

Introduction:

Feedback control is a mechanism which is used to efficiently meet strategic goals by monitoring and observing the organization’s activities and using feedback as a measure to account for whether the firm’s performance has met the established standards.

Financial control suggests the mechanism built in observing the organization’s financial performance and position. The theory proposes that not only managers have to fraternize the financial position, but also employees; through which open-book management was introduced.

Budgetary control is the process of setting target on business expenditure and in response, try and remain within that target. At the end of the period, the actual expenditure will be compared against the budgeted expenditure and required changes will be made accordingly.

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