Profitability and Cost Analysis - Essay Example

The company has retained the same loyal customers since the beginning of its operation and wants to keep operations simple. It has no intentions of growing thru expansion, entering into a new contract (due to limitations of financial capability), or withdrawing any line of business it is representing. All the lines it is representing are selling well and have contributed to the revenues earned by the company.

3. Do any marketing activities seem to have excessive costs?
Marketing activities of the company are direct and not very excessive. They do it on tradeshows, exhibits, and do a lot of announcements thru social media and e-mails. Since the company is limited to loyal customers, updating them on company products is easily done.
2. Can cost-reducing steps be taken?

Yes, cost-reduction steps can be taken. Cost reduction is implemented by monitoring monthly operating costs and trying to figure out which expenses could be limited. Company practices cost reduction on variable expenses such as travel, representation, energy consumption and miscellaneous expenses.

3. Are the control procedures adequate to ensure that the annual plan objectives are being achieved?

Control procedures of the company are accounting controls, cash control, separation of duties, documentation of all transactions and regular audits. They are adequate controls to ensure that employees are performing their duties honestly and in accordance with the company’s objectives.

4. Does management periodically analyze the profitability of products, markets, territories, and channels of distribution?

Yes, management performs periodic analysis of operation in all its angles thru the establishment of a performance goal. Here, management and employees sit down and talk about how to accomplish the goals and objectives of the company by setting a specific target in a specified time. Each company is assigned different tasks, agrees to set a specific goal of accomplishments. Management monitors accomplishments regularly, or as often as monthly.

5. Are marketing costs and productivity periodically examined?
Yes, this also is monitored very closely on a weekly basis. Internal control is established as a process of monitoring marketing costs and their relative profitability. This process is the responsibility of the Accounting Dept. Read More