Intermediate Management Accounting

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JD Sports have developed a revolutionary new trainer that is particularly suited to marathon runners. It is expensive to make as the material is a new synthetic that reduces the incidence of blisters and is a light soft but durable material that supports the foot but allows the ultimate in comfort and durability.
They plan to market this trainer under the brand name of ‘JD Spontaneous’.

Estimated Financial Data
Sale Price £180 per pair
Variable Costs £85
Fixed Costs £3million
Their preferred material manufacturer can only produce enough to make 32000 pairs in 2017 but another more expensive manufacturer has the capacity to make 42000 pairs but the variable costs would rise to £110 per pair whilst fixed costs remain the same.
Their market research is that initial demand will be limited to sales of 38000 pairs in 2017.

You should produce a 2000 word report +/-10% based on the case study

The Report should include-:
• Key financial ratios the management of the company would find useful for controlling and monitoring internal performance that look at particularly efficiency and effectiveness of the company whilst analysing the current performance of the business.
• An evaluation of models for monitoring performance (e.g. Balance Score card) and their usefulness to the business.
• A discussion on the usefulness of limiting factor analysis and CVP analysis in management decision-making (with reference to the above scenario as an example)
• A spreadsheet that includes financial performance data and relevant management information for decision-making. (see guidance notes)
• Proposed recommendations for the Board of Directors and senior management.
• You will need to make key assumptions and we will guide you on what are suitable figures and data to use e.g. Number of shops 900, Average square meters of retail space per shop, number of employees who are non-customer facing (i.e. Head office staff, warehouse etc.)

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