Explain in technical details why the Lagrange multiplier is crucially used in analysing the theory of the consumer .Further as a managerial economics student ,show how you can apply this technique to advise your company to make sales without making loses and affecting your customers negatively

Create the 2018 budget for Buy-Right Bike Store (BRBS). Add a worksheet to your Project Excel workbook for BRBC Budgeted Income Statement and create the 2018 budget using the following information.

Budgeted Sales of Bike C: Online 75,000 bikes; instore 5,000 bikes.

Bike C is purchased from Built-Right Bike Company, a sister company in the Biltmore Bicycle Corporation (BMBC), for $52 and is sold for $104.

Inventory:

Beginning inventory:      $    52,000

Purchases                            4,108,000

Sales                                                  ?

Ending Inventory             $     52,000

Employees:

Managerial Staff:

Manager: 1 FTE, $45,000 annual salary plus 20% benefits

Bookkeeper: 1 FTE, $40,000 annual salary plus 20% benefits

Purchasing & Receiving Supervisor: 1 FTE, $35,000 annual salary plus 20% benefits

Other staff:

Warehouse: 2.5 FTEs make $15 per hour plus 17% benefits

Online sales staff: 2 FTEs, $15 per hour plus 17% benefits (no commission)

Store Hours:

Monday – Saturday 10:00 am – 6:00 pm

2 sales clerks work from 10-3 M-F

3 sales clerks work from 3-6 M-F

4 sales clerks work 10-6 on Saturdays

Sales clerks earn $15 per hour plus 17% benefits

Instore sales staff share commission equal to 10% of instore sales.

Budgeted Utility cost: $13,200

Budgeted Marketing Cost: $175,000

Contributions & community service: 10% of instore revenue

Other costs (includes depreciation, insurance, etc): $1,300,000

Income tax 29% of Net Revenue

In Chapter 6 you learned about revenue recognition as well as evaluating receivable balances and establishing an allowance for bad debts. Access Starbucks 10-K and answer the following (hint: you will need to explore the first footnote):

10-K link: https://www.sec.gov/Archives/edgar/data/829224/000082922414000041/sbux-9282014x10k.htm#s6571E5A222BF69F5F8068EA40E001FDA

Starbucks has provided detail for 3 categories of net revenue shown on the income statement. List each category and provide a brief summary of each category, including information such as (but not limited to): the amount of revenue in the category for the most recent year, description of revenue stream, when revenue is recognized, how it is recognized (net of what type of items) etc.

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing offerings to its customers. Specifically:

• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated; that is, each functions independently of the other offerings.

• If a customer purchases all aforementioned items together, the total amount owed to MM is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at midpoint, 25 percent at completion).

• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.

Stone, a customer, approach MM with the hopes of reinventing its image to a younger customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page for total consideration of $1.5M and payment terms noted above. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.

Stone makes a payment on November 30, 20X5, in the amount of $750K (50% of total consideration of $1.5M) pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.

Required

MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.

1. How should MM account for the above offering with Stone under the new revenue recognition model?

2. How would your conclusions change if:

   a. The app sold to Stone is actually downloaded more than 500K times in the first month? b. MM believed at the outset that there is about a 75 percent chance that the app will be downloaded more than 500K times and it is probable that there will not be a significant reversal of revenue?

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing
offerings to its customers. Specifically:
• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook
page for $250K. These amounts represent MM’s charges for these items when MM sells
them separately to customers. The TV commercial, the app, and the Facebook page are
not interrelated; that is, each functions independently of the other offerings.
• If a customer purchases all aforementioned items together, the total amount owed to MM
is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the
remaining 50 percent due over the rest of the development period (25 percent at mid-
point, 25 percent at completion).
• If the app is downloaded 500K times or more in the first month, there is a one-time bonus
of $250K payable to MM.
Stone, a customer, approaches MM with the hopes of reinventing its image to a younger
customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to
Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page for total
consideration of $1.5M and payment terms noted above. The agreement creates enforceable
rights and obligations pursuant to MM’s customary business practices. None of these items can
be redirected by MM to another customer. MM performed a credit check on Stone and has
determined that Stone has the intention and ability to pay MM for fulfilling its portion of the
contract. Stone is required to pay MM for performance completed to date if Stone cancels the
contract with MM for reasons other than MM’s failure to perform under the contract as
promised.
Stone makes a payment on November 30, 20X5, in the amount of $750K (50% of total
consideration of $1.5M) pursuant to the agreement. From the date of the quote, it takes MM six
months to develop and produce the TV commercial, two weeks to complete the Facebook page,
and three months to complete a fully functioning app. MM does not think that the app will be
downloaded 500K times in the first month because Stone’s customer base does not quickly
accept newly developed technology. On the basis of its experience with similar technology, MM
has determined that it takes over three months for Stone’s users to begin to download its apps.
Required
MM’s CFO is trying to understand the new revenue recognition model and has asked you to
explain how MM would account for the above scenario under the new standard.
1. How should MM account for the above offering with Stone under the new revenue
recognition model?
Case 17-7c: Mesmerizing Marketers Page 2
Copyright 2019 Deloitte Development LLC
All Rights Reserved.
2. How would your conclusions change if:
a. The app sold to Stone is actually downloaded more than 500K times in the first
month?
b. MM believed at the outset that there is about a 75 percent chance that the app will
be downloaded more than 500K times and it is probable that there will not be a
significant reversal of revenue?

Copyright 2016 Deloitte Development LLC All Rights Reserved.

Case 17-7 Mesmerizing Marketers

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing offerings to its customers. Specifically:

• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated; that is, each functions independently of the other offerings.

• If a customer purchases all aforementioned items together, the total cost is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at mid-point, 25 percent at completion).

• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.

Stone, a customer, approaches MM with the hopes of reinventing its image to a younger customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.

Stone makes a payment on November 30, 20X5, in the amount of $750K pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.

Required

MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.

1. How should MM account for the above offering with Stone under the new revenue recognition model?

2. How would your conclusions change if: a. The app sold to Stone is actually downloaded more than 500K times in the first month?

?

Case 17-7c: Mesmerizing Marketers Page 2

Copyright 2016 Deloitte Development LLC All Rights Reserved.

b. MM believed at the outset that there is about a 75 percent chance that the app will be downloaded more than 500K times and it is probable that there will not be a significant reversal of revenue?

Case 17-7 Mesmerizing Marketers
Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing offerings to its customers. Specifically:
• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated; that is, each functions independently of the other offerings.
• If a customer purchases all aforementioned items together, the total cost is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at mid-point, 25 percent at completion).
• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.
Stone, a customer, approaches MM with the hopes of reinventing its image to a younger customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.
Stone makes a payment on November 30, 20X5, in the amount of $750K pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.
Required
MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.
1. How should MM account for the above offering with Stone under the new revenue recognition model?
2. How would your conclusions change if:
a. The app sold to Stone is actually downloaded more than 500K times in the first month?
b. MM believed at the outset that there is about a 75 percent chance that the app will
be downloaded more than 500K times and it is probable that there will not be a
significant reversal of revenue?

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing
offerings to its customers. Specifically:

• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are
not interrelated; that is, each functions independently of the other offerings.

• If a customer purchases all aforementioned items together, the total cost is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at mid-point, 25 percent at completion).

• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.

Stone, a customer, approaches MM with the hopes of reinventing its image to a younger
customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a
credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.

Stone makes a payment on November 30, 20X5, in the amount of $750K pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.

Required
MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.

1. How should MM account for the above offering with Stone under the new revenue
recognition model?

2. How would your conclusions change if:

a. The app sold to Stone is actually downloaded more than 500K times in the first
month?

b. MM believed at the outset that there is about a 75 percent chance that the app will
be downloaded more than 500K times and it is probable that there will not be a
significant reversal of revenue?

SCM 366

Revenue Management Assignment II

II. San Francisco Express Airlines, SaFE for short, flies from PHL to SFO. On a Thursday evening flight, the number of last-minute no-shows and cancellations is Poisson distributed with mean 7.5. SaFE has an unlimited number of low fare travelers who pay $300. The cost of bumping such a passenger is estimated to be $350 (due lost goodwill as well as the cost of routing their itinerary through other airlines).   SaFE offers this low fare because it also comes with a cancellation/rebooking fee of $150 – if a customer doesn’t show up for the flight or cancels her reservation, she must pay $150 to use the ticket on another flight.

To maximize revenue from this flight, how many seats should the airline overbook?

Customers are more reliable on the Friday evening flight. On that flight, the average number of no-shows and cancellations is Poisson with mean 4.5. Suppose SaFE overbooks that flight by 6 seats. What is the probability that at least 1 passenger will be bumped from this flight?

PLEASE ANSWER IT IN EXCEL SHEET WITH EXPLANATION