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Concept Introduction:
Variable Cost: Variable cost is a cost that changes, when volume of production changes in the same direction and in the same proportion.
Fixed Cost: Fixed cost is a cost that remains constant, irrespective of changes in production volume.
Contribution Margin: Contribution margin is per unit gross operating margin of a product and calculated by selling price per unit minus variable cost per unit.
Constraining factor: Constraining factor is a factor that restricts or limits the production or sale of any product or service. It is also called limiting factor.
1.
To Identify: The constraining factor for Brik.
2.
To Fine: The company should emphasize the product line.
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Chapter 25 Solutions
Horngren's Accounting: The Managerial Chapters, Student Value Edition (12th Edition)
- 6 pts financial accountingarrow_forwardRecently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact, would the write-down of inventory have had on Abercrombie's current ratio?arrow_forwardNeed correct answer general accounting questionarrow_forward
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