Case study Zara – questions 1 and 2 – page 354
1 What can competitors learn from Zara?
2 How is Zara succeeding if they don’t have a unique product to offer?
this is the case study of zara
As the rest of the Australian retailing economy was flailing in April 2011 after the global financial crisis, reporting lost consumer con dence and increasing online shopping, the Zara Sydney store was just gearing up to open its doors, on all three levels of the new 1830-square-metre Westfield store (Tadros, 2010). And open they did, amid shopper mayhem. Customers queued for hours and were quick to swipe items before they could make it to the shelf. Some estimates quote 80 per cent (AU$1.2 million) worth of stock being sold on the rst day’s opening in Sydney (Burns, 2011). A few months later, the Melbourne Bourke Street store opened, with hundreds of people lining up to get in. So how do they do it? Zara has a unique business model that essentially boasts good quality, on-trend merchandise and a ordable prices, resulting in staggering pro ts. Each year, the reported 200 designers on sta put out around 20,000 items (Inditex, 2016). The global distribution centre in Spain moves around 2.5 million items per week, and nothing stays in the warehouse for longer than 72 hours at a time (Kottke, 2015). Chief Communications O cer Jesus Echevarria is quoted as saying the strategy of the fast-fashion retailers is ‘the complete opposite’ to the traditional model. He says, ‘it’s a matter of customer feedback. We are pretty quick to react’ (Burns, 2011). Zara puts the success down to using customer feedback to design their range. However, it is the business model that incorporates speed rather than unique innovation that sets Zara apart from the rest. It is reported that Zara uses customer feedback and a daily sales analysis from all 1830 stores to compile manufacturing plans within 48 hours (Burns, 2011). These plans are then communicated to 1500 factories in Asia, Spain and Brazil— the garments are then delivered to stores within three weeks (Burns, 2011). This means that Zara stores can be replenished with small-batch fashion choices twice a week. Zara stocks many different products: apparel for men, women and kids, plus bags, accessories and shoes. While Zara has at times been criticised for copying major designers, they insist that it is the customer-driven focus that gives shape to the products that they design worldwide. From humble beginnings in 1975, when the rst Zara store opened in A Coruña, Spain, Zara now operates in 88 countries, with online shopping also available (Inditex, 2016). Retailers like Zara represent a new wave of retailing, bringing production even closer to customer demands.
In: Accounting
Caesars Palace® Las Vegas made headlines when it undertook a $75 million renovation.
In mid-September 2015, the hotel closed its then-named Roman Tower, which was last updated in 2001, and started a major renovation of the 567 rooms housed in that tower. On January 1, 2016, the newly renamed Julius Tower reopened, replacing the Roman Tower. In addition to renovating the existing rooms and suites in the former Roman Tower, 20 guest rooms were added to the Roman Tower. With the renovation completed, Caesars expects the Julius Tower room rate to average around $149 per night. This increase, a $25 or 20.2% increase, reflects, in part, the room improvements. Assume that the annual fixed operating costs for the Julius Tower in Caesars Palace® Las Vegas will be $5,000,000. This amount represents an increase of $200,000 per year compared to pre-renovation. Also assume that the variable cost per hotel room night after the renovation is $27; before therenovation, the variable cost per room night was $20. The contribution margin per room night after the renovation is $122; before the renovation, the contribution margin per room night was $129. The average hotel occupancy rate, in 2014, for Caesars Entertainment Corporation was 91.2%, according to its 2014 Form 10-K. By comparison, the average hotel occupancy rate in Las Vegas overall, for that same time period, was 86.8%, according to Stastia.com.
1. if Caesars has a target profit of $15,000,000, how much sales revenue does the company need to make to achieve its target profit? (Round interim calculations to the nearest whole percent and/or dollar. Round your final answer to the nearest whole dollar.)
A. $42,153,444
B. $29,845,345
C. $24,390,244
D. $15,852,843
2. If Caesars has a target profit of $15,000,000, how many rooms must the company occupy throughout the year in order to reach its target profit? (Round your answer up to the nearest whole room.)
A. $240,385
B. $134,229
C. $1122,951
D. $163,935
3. What is each room's contribution margin after the renovations?
A. $104
B. $122
C. $97
D. $129
In: Accounting
The Simpsons, owners of a spa on the island of Montreal, have been hard-hit by the pandemic. Before they were forced to close their spa, their take home income, after taxes but before living expenses, was $7,000 a month. The Simpsons spent all of their take-home cash flow and even more, by borrowing on a line of credit (LOC). The day their spa was closed the balance on their LOC was $8,520. Normally they use the LOC to clear the balance on their several credit cards each month. Terms of the LOC include a repayment of 3% of principal every month plus interest charged at a rate of 0.5% per month. Three years ago the Simpsons took out a $532,000 mortgage to purchase a home in Beaconsfield. Payments are monthly at a rate of 3.6%, compounded semi-annually. The original amortization period was 20 years and they have made 34 payments to date. The Simpson’s mortgagor has offered them the possibility of suspending payments for the next 4 months. Nevertheless, they will still owe the interest they would have paid on each payment. Furthermore, the future value of the unpaid interest after 4 months will mean that they will have to pay interest on the outstanding interest should they take up this offer.
a) Excluding the balance on their LOC, what minimum emergency fund should the Simpsons have held to meet unforeseen events? What type of investment would be suitable for such a fund?
b) How much would the couple have to pay on the LOC for the month following closure of their spa? What impact would not making the payment have on their credit rating? Please explain.
c) What is the monthly payment on the Simpson’s mortgage? What is the balance after 34 months? Round to the nearest dollar
d) Draw up the Simpson’s mortgage amortization table for the next four months (i.e. for payments 35-38). Their monthly mortgage rate is 0.2978%. Round to the nearest dollar.
e) How much interest will the Simpsons owe at the end of the 4-month period? (Mortgage payments are made at the end of the month.) Round to the nearest dollar. Remember, they will be obliged to pay interest on their interest. If they are given the choice of adding this to their mortgage balance or paying it immediately in cash, what would you recommend, and why?
In: Finance
The financial year for Crystal Catering Services ends on 30 June. After analysing the accounting records and other data for the business of Crystal Catering Services, the following information is made available for the year ended 30 June 2020.
Required:
Using the information above, make the necessary adjusting entries for Crystal Catering Services for the year ended 30 June 2020.
In: Accounting
Recording Notes Receivable: Issuance, Payment, and Default Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment 6 months after issuance. Consider the following transactions, which describe Marydale's experience with two such notes: On October 31, 2019 Marydale accepts a 6-month, 12% note from Customer A in lieu of a $3,600 cash payment for merchandise delivered on that day. On February 28, 2020 Marydale accepts a 6-month, $2,100, 12% note from Customer B in lieu of a $2,100 cash payment for merchandise delivered on that day. On April 30, 2020 Customer A pays the entire note plus interest in cash. On August 31, 2020 Customer B pays the entire note plus interest in cash. Required: Prepare the necessary journal and adjusting entries required to record Transactions a through d in Marydale's records. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Oct. 31, 2019 Record sale Dec. 31, 2019 Record accrued interest income b. Feb. 28, 2020 Record sale c. Apr. 30, 2020 Record collection of note receivable d. Aug. 31, 2020 Record collection of note receivable
In: Accounting
Corbett Company develops software. The market is very competitive and Corbett's competitors continue to introduce new products at low prices. Corbett offers a wide variety of software - from simple programs to extremely complex programs. Like most software companies Corbett's raw materials costs are insignificant. You have recently been hired by Corbett as a business analyst and attended a seminar on Activity-Based Costing (ABC) and are considering using it at Corbett. Working with the Software Department Manager you identigy the following activities, related costs, and cost-allocation bases.
Activity Estimated indirect acitivity costs Allocation base estimated quantity of allocation base
Applications development $1,800,000 New applications 6 new applications
Content production 2,800,000 Lines of code 14 million lines
Testing 248,000 Testing hours 1,600 testing hours
Total indirect costs 4,848,000
Corbett is planning to develop the following new applications
1) X-Page
2) X-Secure
X-page requires 680,000 lines of code and 90 hours of testing, while x-secure requires 10.2 million lines of code and 540 hours of testing. Corbett expects to produce and sell 20,000 units of x-page and 8 units of x-secure.
1) Compute the cost allocation rate for each activity.
2) Use the ABC allocation rates to compute the indirect cost of each unit of x-page and x-secure.
3) The company's original single-allocation based cost system allocated indirect costs to products at $113 per programmer hour. x-page requires 8,000 programmer hours while x-secure requires 12,000 programmer hours. Compute the total indirect costs allocated to x-page and x-secure under the original system. Compute the indirect cost per unit for each product.
4) Write a memo to the General Manager of Corbett Company comparing the ABC costs per unit to the costs from the simpler original system. Explain why the unit costs changed and whether you think the new ABC system is likely to pass the cost-benefit test.
In: Accounting
Corbett Company develops software. The market is very competitive and Corbett's competitors continue to introduce new products at low prices. Corbett offers a wide variety of software - from simple programs to extremely complex programs. Like most software companies Corbett's raw materials costs are insignificant. You have recently been hired by Corbett as a business analyst and attended a seminar on Activity-Based Costing (ABC) and are considering using it at Corbett. Working with the Software Department Manager you identigy the following activities, related costs, and cost-allocation bases.
Activity Estimated indirect acitivity costs Allocation base estimated quantity of allocation base
Applications development $1,800,000 New applications 6 new applications
Content production 2,800,000 Lines of code 14 million lines
Testing 248,000 Testing hours 1,600 testing hours
Total indirect costs 4,848,000
Corbett is planning to develop the following new applications
1) X-Page
2) X-Secure
X-page requires 680,000 lines of code and 90 hours of testing, while x-secure requires 10.2 million lines of code and 540 hours of testing. Corbett expects to produce and sell 20,000 units of x-page and 8 units of x-secure.
1) Compute the cost allocation rate for each activity.
2) Use the ABC allocation rates to compute the indirect cost of each unit of x-page and x-secure.
3) The company's original single-allocation based cost system allocated indirect costs to products at $113 per programmer hour. x-page requires 8,000 programmer hours while x-secure requires 12,000 programmer hours. Compute the total indirect costs allocated to x-page and x-secure under the original system. Compute the indirect cost per unit for each product.
4) Write a memo to the General Manager of Corbett Company comparing the ABC costs per unit to the costs from the simpler original system. Explain why the unit costs changed and whether you think the new ABC system is likely to pass the cost-benefit test.
In: Accounting
Assign CPT and ICD-10-CM codes to this Surgery Musculoskeletal System Service.
LOCATION: Inpatient, Hospital
PATIENT: Debbie Pedersen
PRIMARY CARE PHYSICIAN: Frank Gaul, MD
SURGEON: Mohomad Almaz, MD
DIAGNOSIS: Left type II closed supracondylar humerus fracture, posterior lateral displacement, after fall from playground equipment.
INDICATIONS: Debbie is an 8-year-old girl who fell today from the playground and suffered a type II closed supracondylar humerus fracture with posterior lateral displacement. I have spoken with her parents and reviewed the intended procedure, risks, and potential complications. Her parents have agreed with the treatment plan and wish to proceed.
PROCEDURE PERFORMED: Closed reduction initially, followed by open treatment of supracondylar fracture.
ANESTHESIA: General
PROCEDURE: Debbie was brought to the operating room. She fell from playground equipment today. She was placed under general anesthesia. She was transferred to the operating room table. Prior to prepping and draping her left upper extremity, I was able to again obtain pulses. I did initially bring in the mini C-arm. A closed reduction was performed initially by milking the brachialis primarily laterally. While this was being done, I did apply extension, felt a reduction. I then subsequently flexed the elbow with pressure on the posterior aspect of the distal humerus. After the elbow was flexed, I subsequently externally rotated and pronated the forearm. Overall, I actually had a very reasonable reduction. After this was performed, I felt that I could repeat this, so her left arm was prepped and draped in the usual sterile manner. Starting laterally, a small incision was made over the lateral epicondyle. Blunt dissection was taken down to the bone. One 0.064 mm K-wire was placed through the lateral epicondyle, across the fracture, engaging the medial column and medial cortex. Its position was confirmed on AP and lateral radiographs. A second K-wire was placed just posterior to this, extending proximally into the lateral column. This did also penetrate just to the anterior cortex. Position was confirmed on AP and lateral radiographs and had acceptable position, alignment and reduction. After this was performed, the arm was again fully externally rotated. The medial epicondyle was felt. I did feel the proximal location of the ulnar nerve. An incision was taken through the skin. Blunt dissection was taken through subcutaneous tissue. I actually was able to find the nerve in this, so subsequently retracted posteriorly. Blunt dissection was made directly to the medial epicondyle. Under direct visualization, the K-wire was placed through the medial epicondyle, across the fracture and through the lateral column of the humeral metaphysis. Overall alignment and position were deemed acceptable. No tourniquet was used. With the arm under live fluoroscopy, I did extend the elbow to approximately 90 degrees. Of note, to maintain the reduction, I did hold her arm in full flexion and pronation and subsequently Cobaned her arm in this position. Again, the Coban was released, the arm was taken to 90 degrees, and her fingers were pink, warm, with brisk refill. I utilized a Doppler and was able to get good Doppler radial and ulnar pulses. I was able to palpate a radial pulse. Medially, the wound was irrigated. The skin was closed with nylon sutures. Laterally, I did have to release the pin site and one suture was used to reapproximate the incision. Xeroform was placed. The pins were cut and bent. Soft roll was placed. She was placed in the posterior splint with reinforcement medially. She was awakened, extubated, and taken to recovery uneventfully. Her fingers again, after the splint was placed, were pink and demonstrated brisk capillary refill.
PLAN: We will keep her overnight. I did inject her incision and pin sites both medially and laterally with a total of 12 cc of 0.25% Marcaine without epinephrine. We likely will be able to dismiss her tomorrow to go home. She tolerated the above operative procedure with no known complications.
In: Nursing
Part C Question 3 Accounting for Income Taxes
Reed Ltd is a manufacturer of surfboards which commenced operations on 1 July 2019. The Statement of Comprehensive Income and the Statement of Financial Position were compiled on 30 June 2020. The following information was available:
Statement of Comprehensive Income for the year ended 30 June 2020
$ $
|
Sales |
430,000 |
||
|
Less |
|||
|
Cost of Goods Sold |
130,000 |
||
|
Administrative expense |
70,000 |
||
|
Warranty expense |
60,000 |
||
|
Depreciation- machine |
40,000 |
||
|
Insurance expense |
20,000 |
320,000 |
|
|
Profit before income tax |
110,000 |
||
Following information was extracted from the Statement of Financial Position at 30 June 2020:
|
2019 |
2020 |
|
|
Prepaid insurance |
24,000 |
36,000 |
|
Machine |
400,000 |
400,000 |
|
Less: Accumulated depreciation |
40,000 |
80,000 |
|
Provision for warranty |
34,000 |
28,000 |
Other information was available for the year ended 30 June 2020:
Required: (Narrations are not required in this question)
In: Accounting
Question 3 Accounting for Income Taxes
Reed Ltd is a manufacturer of surfboards which commenced operations on 1 July 2019. The Statement of Comprehensive Income and the Statement of Financial Position were compiled on 30 June 2020. The following information was available:
Statement of Comprehensive Income for the year ended 30 June 2020
$ $
|
Sales |
430,000 |
||
|
Less |
|||
|
Cost of Goods Sold |
130,000 |
||
|
Administrative expense |
70,000 |
||
|
Warranty expense |
60,000 |
||
|
Depreciation- machine |
40,000 |
||
|
Insurance expense |
20,000 |
320,000 |
|
|
Profit before income tax |
110,000 |
||
Following information was extracted from the Statement of Financial Position at 30 June 2020:
|
2019 |
2020 |
|
|
Prepaid insurance |
24,000 |
36,000 |
|
Machine |
400,000 |
400,000 |
|
Less: Accumulated depreciation |
40,000 |
80,000 |
|
Provision for warranty |
34,000 |
28,000 |
Other information was available for the year ended 30 June 2020:
Required: (Narrations are not required in this question)
In: Accounting