Comparative Analysis: Accounting for Decision Making at Uber & Leemo

This report provides a comparative analysis of Uber and Leemo's accounting practices for decision-making. It examines the cost structures of both companies, calculating break-even points and profitability. The analysis reveals that Uber's cost structure is more efficient due to its variable cost model, leading to a lower break-even point compared to Leemo, which has higher fixed costs. While Leemo's profitability could surpass Uber's after reaching the break-even point, Uber currently holds a more favorable position. The report suggests that Leemo should focus on reducing fixed costs to improve its financial performance and mitigate risks. Desklib offers a platform to explore similar assignments and study resources for students.

Running head: Accounting for decision making
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Project Report: Accounting for decision making

Accounting for decision making 2
Que a)
Uber Leemo
Selling price per ride 30 30
Variable cost 24 15
Contribution margin per
unit 6 15
Fixed cost per year 300000 1500000
Calculation of breakeven point
Breakeven in units 50,000 1,00,000
Breakeven in dollars $15,00,000 $30,00,000
(Bromwich & Bhimani, 2005)
Que B)
b) Profit
calculations
Uber Leemo
Cab ride 50,000 1,00,000 1,50,000 50,000 1,00,000 1,50,000
Total revenue 15,00,000 30,00,000 45,00,000 15,00,000 30,00,000 45,00,000
Total variable
costs 12,00,000 24,00,000 36,00,000 7,50,000 15,00,000 22,50,000
Contribution
margin 3,00,000 6,00,000 9,00,000 7,50,000 15,00,000 22,50,000
Total fixed costs 3,00,000 3,00,000 3,00,000 15,00,000 15,00,000 15,00,000
Net income(loss) - 3,00,000 6,00,000 (7,50,000) - 7,50,000

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(Weygandt, Kimmel & Kieso, 2015)
Que c)
Through the above analysis and the calculation of break even point, it has been
analyzed that the cost structure of UBER is much better than LEEMO. As UBER focus over
the work and pays the driver accoridng to the ride. Further, through the analysis, it has been
found that the total break even units of UBER is quite lesser than LEEMO and it dpeicts that
it would be easier for the UBER to enahnce the profitability position rather than the LEEMO.
Further, through the break even analysis and profit analysis over both the comapnies it
has been found that it would be easier for the UBER to reach over the break even point rather
than LEEMO but once the break even level would be crossed by the company than the profits
of the LEEMO would be more higher than the UBER (Warren, Reeve & Duchac, 2011).
Thorugh the current position, it has been analyzed that the profitable position of UBER is
quite better than the profitbale position of the LEEMO and thus LEEMO is suggestd to
reduce the level of the fixed cost to manage the profit.
Que d)
Through the above analysis and the calculation of break even point, it has been
analyzed that the cost structure of LEEMO is much riskier than UBER. As LEEMO mainly
focuses over the number of drivers and not upon their number od rides as well as the fixed
salaries are given to the drivers (Hoque, 2012). Further, through the analysis, it has been
found that the total break even units of UBER is quite lesser than LEEMO and it dpeicts that
it would be easier for the UBER to enahnce to meet the level of no profit and no loss but

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LEEMO would have to make extra efforts to recah over the point of BEP. Though, it would
be easiier for the company to enahnce the level of profits when it would recah over the BEP
point but till that time, the cost structure of the company is mor riskier than the cost structure
of UBER (Schlichting, 2013).
Thorugh the current position, it has been analyzed that the cost structure of UBER is
less riskier than the costs structure of the LEEMO and thus LEEMO is suggestd to reduce the
level of the fixed cost to manage the effieincy and better position in the market.

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References:
Bromwich, M. & Bhimani, A., (2005). Management accounting: Pathways to progress. Cima
publishing.
Hoque, Z., (2012). Strategic management accounting. Spiro Press.
Schlichting, T. (2013). Fundamental Analysis, Behavioral Finance and Technical Analysis on
the Stock Market. GRIN Verlag.
Warren C., Reeve J. & Duchac J. (2011). Financial and Managerail Accounting. Cengage
Learning.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting.
John Wiley & Sons.

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