It is a strategic management
Question 1: Discuss the business-level and corporate-level strategies of Apple, as discussed in the articles below. Why is Apple pursuing these strategies? Be sure to discuss competitive pressures from Sony as it pursues its strategy. Compel your response with data from the articles.
Article 1:
THE NEWEST NUMBERS ARE IN —While iPhone sales remain stagnant, Apple services hit $10 billion in revenue
Apple announced on its earnings call today that it had surpassed its revenue estimates for Q4 2018. The iPhone maker boasted $62.9 billion in revenue, slightly more than the $60-62 billion it previously estimated, as well as $14.1 billion in profit, up from $11.5 billion in the previous quarter.
"We're thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our two billionth iOS device, celebrated the 10th anniversary of the App Store, and achieved the strongest revenue and earnings in Apple's history,” Apple CEO Tim Cook said in a statement.Ars Technica
Apple sold 46.8 million iPhones, 9.6 million iPads, and 5.2 million Macs in the final quarter of 2018. While that represents a 14 percent increase in iPhone sales when compared to last quarter, it's about the same number of iPhones sold this time last year. However, year-over-year revenue from iPhone sales was up by 29 percent, thanks to the increase in iPhone prices.
This quarter saw the reveal of the iPhone XS and XS Max, but only a fraction of those sales contribute to these numbers because of the handsets' late release date. The YoY increase mostly comes from the $1,000 iPhone X, which has been the best-selling iPhone since its launch in September 2017. The X continues to sell well enough that Apple moved roughly the same number of iPhones and made nearly 30 percent more. Now, the average sale price for an iPhone is $793, up drastically from $618 in the same quarter last year.
Apple's services business, a constant bright spot in recent quarters, hit a revenue milestone in Q4 2018: $10 billion (it's $9.98 billion to be exact, but Apple rounded up). That's an increase of 27 percent from Q4 2017, in which services including iCloud, Apple Music, the App Store, and others brought in $7.9 billion in revenue.
When asked about how Apple plans to continue growing its services business, CFO Luca Maestri highlighted the "exponential trajectory" of all of Apple's services from Apple Music to the Apple Store to Apple Pay. Maestri also called out Apple's "very large and growing" install base, which is currently at an all-time high. With so many users within the Apple ecosystem, the company now has the opportunity to monetize more services, improve existing services, and add new ones like Apple's Search Ad business on the App Store. Maestri said that the company is on track to double its fiscal 2016 services revenue by 2020.
iPad numbers were lackluster: unit sales were down 16 percent from last quarter, and revenue was down 14 percent as well. That might be due to all the rumors leading up to this week's "special event" in which Apple released the new iPad Pros. Those devices feature all-new designs, a new Apple Pencil, and higher prices to boot. Meanwhile, Mac sales brought in 39 percent more revenue than last quarter, thanks in part to sales of the updated MacBook Pros and the back-to-school season overall.
Apple's "other products" category, which includes the Apple Watch, AirPods, Apple TV, HomePod, and others, saw a 13 percent sequential increase and a 31 percent increase from this time last year. Cook praised the wearables segment (Apple Watch, AirPods, and Beats devices) numerous times on today's call, although Apple still doesn't provide individual product sales numbers for the devices included in that category.
Cook said the company saw an "overwhelmingly positive" response to the Apple Watch Series 4, which debuted in September alongside the iPhone XS and XS Max. When asked about Apple's future in the health care space, Cook said that health is an "area of major interest" for Apple as the company looks to add more health products and services into its business.
Notably, Apple will start treating all of its hardware like it does the "other products" category we're used to seeing in its earnings reports. Apple stated that it will no longer report unit sales for iPhones, iPads, and Macs in future reports. Maestri said that unit sales are "not representative of the underlying strength of our business." Analysts and investors often look to those numbers to determine how well certain devices have sold in comparison to previous quarters and years, and they help calculate average selling prices per product. Apple clearly wants to highlight how much it's making from product sales, without also showing that some devices, like the iPhone, may not be selling as many units as some expected.
Both Apple and investors are looking forward to the first quarter of 2019, which will include holiday sales and more data about iPhone XS, XS Max, and XR sales. Apple set its sights high: it estimates Q1 2019 revenue to be between $89 and $93 billion.
Article 2 - Sony:
Pioneer of Walkman targets premium market dominated by Bose and Beats
TOKYO -- When Ichiro Takagi took over Sony Corp.'s audio business seven years ago, he found the staff took pride in being the global No. 1 in headphones, in terms of units sold. But he was appalled at how many were $10 headphones sold for minimal profit at grocery stores. "What's the point of that? Where's our brand image?" Mr. Takagi recalls telling employees. Fast forward to this fall and the international electronics show in Berlin, where Mr. Takagi was showing off the latest version of his flagship product, a $350 pair of noise-canceling wireless headphones.
The premium-price headphone market has been largely dominated by Bose, the industry pioneer popular with frequent fliers, and Beats, the fashion-savvy brand acquired by Apple Inc. for $3 billion in 2014. All share the challenge of wooing listeners who already get free earbuds with their smartphones.
Sony said in May it has 11% of the headphone market in terms of revenue, the third-largest slice. It didn't name the top two companies.
The audio business -- where Sony has been a player since the 1950s -- is a prime example of how it got back to profitability in recent years, even in a traditional hardware business that once looked like a lost cause. For the year that ended in March, sales for the audio unit rose for the first time in 20 years after having fallen some 80% from the peak.
More important for Chief Executive Kenichiro Yoshida, the home-electronics division, including audio and televisions (another former money loser), posted operating profit of nearly $800 million for the year, helping Sony achieve record overall profit. Mr. Yoshida is hoping roughly to match that record in the current fiscal year: Quarterly earnings coming Tuesday will give a progress report. The rise of Spotify Technology SA and other music services has been good for headphone makers, increasing the time consumers spend listening on the go. Streaming companies such as Spotify and France-based Deezer offer high-resolution services that have expanded the market for higher-quality headphones costing hundreds or even thousands of dollars. Recent product releases by Sony include a $280 pair of earphones; an $8,500 portable music player targeted at audiophiles goes on sale in December, with a gold-plated volume controller and a battery system designed to reduce noise.
In the first generation of portable MP3 music players, "the quality of the music sources was poor," Sony audio executive Yoshinori Matsumoto said. "We couldn't push high-end listening devices because they would highlight the coarseness." Now, better technology has "made high-quality music more accessible both to customers and creators," he said.
Audio has paralleled Sony's highs and lows through its 72-year history. The Walkman in 1979 set off a revolution in portable electronic devices, with Sony in the lead. But in the 2000s, Sony let Apple and the iPod seize the dominant position. By 2011, the Tokyo company was nearly giving up on its old hardware products. "The attitude of management at that time was like, 'If you're so-so, that's fine,' " Mr. Takagi, the audio-unit chief, said. That changed under then Chief Executive Kazuo Hirai, who took over in 2012, and Mr. Yoshida, who was chief financial officer under Mr. Hirai and became CEO this year. They pushed the audio team to drop cheap products and focus on a few high-end models.
Mr. Takagi says the new management scrapped an organizational chart that had separate groups of engineers focusing on subcategories like car audio. "I told them to look around the whole industry to come up with products that consumers are willing to pay extra for," he said.
Sony says the $350 headphones can detect the owner's facial shape, hairstyle and presence of glasses, as well as pressure changes in an airplane, all to optimize the noise-canceling feature. "Our latest model is distinctly the best in terms of noise-canceling technology," says Mr. Takagi, who is in the habit of visiting electronics stores to eavesdrop on what customers are saying to salespeople. "It's obvious if you ask your ears."
Another Sony rival, especially for younger customers, is Beats. Mr. Matsumoto says the competition has led Sony to stress fashion as well as sound quality. "In China, headphones have become part of the outfit for young people, and they have to have a style that people want to wear all the time, even when they are not listening," he said.
Mr. Takagi said there is more innovation to come, such as headsets that stream music from the internet on their own without having to be hooked up to a smartphone. "Audio will remain a profitable business so long as we keep listening to music," Mr. Takagi said. "If we remain as a strong and respected player in the industry, then the whole company will be too because audio is the origin of Sony."
In: Operations Management
The trial balance columns of the worksheet for Novak Company at
June 30, 2022, are as follows.
|
Novak Company |
||||
|---|---|---|---|---|
|
Trial Balance |
||||
|
Account Titles |
Dr. |
Cr. |
||
| Cash | 2,400 | |||
| Accounts Receivable | 2,640 | |||
| Supplies | 1,860 | |||
| Accounts Payable | 1,040 | |||
| Unearned Service Revenue | 420 | |||
| Common Stock | 3,100 | |||
| Service Revenue | 3,100 | |||
| Salaries and Wages Expense | 660 | |||
| Miscellaneous Expense | 100 | |||
| 7,660 | 7,660 | |||
Other data:
|
1. |
A physical count reveals $500 of supplies on hand. | |
|
2. |
$200 of the unearned revenue is still unearned at month-end. | |
|
3. |
Accrued salaries are $290. |
Complete the worksheet.
|
Novak Company |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Trial Balance |
Adjustments |
Adj. Trial Balance |
Income Statement |
Balance Sheet |
||||||||||||||||
|
Account Titles |
Dr |
Cr. |
Dr |
Cr. |
Dr |
Cr. |
Dr |
Cr. |
Dr |
Cr. |
||||||||||
| Cash |
2,400 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Accounts Receivable |
2,640 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Supplies |
1,860 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Accounts Payable |
1,040 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Unearned Service Revenue |
420 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Common Stock |
3,100 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Service Revenue |
3,100 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Salaries and Wages Expense |
660 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Miscellaneous Expense |
100 |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
|||||||||||
| Totals |
7,660 |
7,660 |
||||||||||||||||||
| Supplies Expense |
enter a debit amount |
enter a credit amount |
enter an adjusted debit balance |
enter an adjusted credit balance |
enter a debit amount |
enter a credit amount |
enter a debit balance |
enter a credit balance |
||||||||||||
| Salaries and Wages Payable | enter a debit amount | enter a credit amount | enter an adjusted debit balance | enter an adjusted credit balance | enter a debit amount | enter a credit amount | enter a debit balance | enter a credit balance | ||||||||||||
| Totals | enter a total for the debit column | enter a total for the credit column | enter a total for the debit column | enter a total for the credit column |
enter a total for the debit column |
enter a total for the credit column |
enter a total for the debit column |
enter a total for the credit column |
||||||||||||
| Net Income | enter a total net income or loss amount | enter a total net income or loss amount | enter a total net income or loss amount | enter a total net income or loss amount | ||||||||||||||||
| Totals | ||||||||||||||||||||
In: Accounting
Balanced Scorecard Preparation
The following information is presented for the Worldwide Auditor's
Association. For the year ended November 30, 2017, the organization
had set a membership goal of 100,000 members with the following
anticipated results (and actual results for the
year-end).
| Worldwide Auditors' Association | ||
|---|---|---|
| Revenues and Expenses | ||
| For Year Ending November 30, 2017 | ||
|
($ in thousands) |
Planned | Actual |
| Revenues | $55,859.6 | $55,054.0 |
| Expenses | ||
| Salaries | 27,900.0 | 29,000.0 |
| Other personnel costs | 6,975.0 | 6,786.0 |
| Occupancy costs | 3,859.6 | 5,650.0 |
| Reimbursement to local units | 1,480.0 | 1,600.0 |
| Other membership services | 1,050.0 | 1,000.0 |
| Printing and paper | 525.0 | 640.0 |
| Postage and shipping | 220.0 | 242.0 |
| General and administrative | 1,090.0 | 1,076.0 |
| Excess of revenues over expenses | $12,760.0 | $ 9,060.0 |
Additional information (PLANNED):
• Membership dues were increased from $360 to $400 at the
beginning of the year.
• One-year subscriptions to Worldwide Auditor were
anticipated to be 2,400 units.
• Advertising revenue was budgeted at $320,000. Each magazine was
budgeted at a cost of $36.
• A total of 29,000 technical reports were anticipated at an
average price of $80 with average costs of $22.
• The budgeted one-day courses had an anticipated attendance of
33,000 with an average fee of $450. The two-day courses had an
anticipated attendance of 3,000 with an average fee of $770 per
person.
• The organization began the year with net capital assets of
$88,000,000 with a planned cost of capital of 9 percent.
Additional 2017 information (ACTUAL):
• Membership dues are $400 per year, of which $100 is considered
to cover a one-year subscription to the association’s journal.
Other benefits include membership in the association and unit
affiliation.
• One-year subscriptions to Worldwide Auditor are sold to
nonmembers for $160 each. A total of 2,500 of these subscriptions
were sold. In addition to subscriptions, the journal generated
$400,000 in advertising revenue. The cost per magazine was
$40.
• A total of 30,000 technical reports were sold by the Books and
Reports Department at an average unit selling price of $90. Average
costs per publication were $24.
• The association offers a variety of continuing education courses
to both members and nonmembers. During 2017, the one-day course,
which cost participants an average of $500 each, was attended by
31,300 people. A total of 1,985 people took two-day courses at a
cost of $800 per person.
• General and administrative expenses include all other costs
incurred by the corporate staff to operate the association.
• The organization has net capital assets of $90,060,000 and had an
actual cost of capital of 9 percent.
Required
a. Prepare a balanced scorecard for IAA for November 2017 with
calculated key performance indicators presented in two columns for
planned performance and actual performance--include key financial,
customer, and operating performance indicators.
Include all zeros with figures. For example, 2017 Planned Total Revenues for $55,859.6 (thousand) is entered as $55,859,600
| 2017 Planned | 2017 Actual | |
|---|---|---|
| *Compute as a ratio. Round three decimal places. | ||
| Financial information | ||
| Total revenues | Answer | Answer |
| Total costs | Answer | Answer |
| Journal advertising | Answer | Answer |
| ROI (round to three decimal places) | Answer | Answer |
| Residual income | ||
| Income | Answer | Answer |
| Minimum return | Answer | Answer |
| Residual income | Answer | Answer |
| Customer information | ||
| Course attendance | Answer | Answer |
| Technical reports sold | Answer | Answer |
| Operating criteria | ||
| Average cost per special publication | Answer | Answer |
| Average cost per magazine | Answer | Answer |
| Other personnel costs vs. salaries* | Answer | Answer |
b. Which of the evaluation areas you selected indicated success and which indicated failure?
Success areas:
| 1. | AnswerMore reports were soldROI increased significantlyTotal revenues increased while total costs decreased |
| 2. | AnswerOther personnel costs were less in relation to salariesPublication costs went downResidual income increased significantly |
| 3. | AnswerAdvertising revenue went upMore people took coursesTotal revenues increased while total costs decreased |
Failure areas:
| 1. | AnswerAdvertising revenue went downLess reports were soldTotal revenues decreased while total costs increased |
| 2. | AnswerLess reports were soldOther personnel costs were more in relation to salariesROI decreased significantly |
| 3. | AnswerAdvertising revenue went downOther personnel costs were more in relation to salariesResidual income decreased significantly |
In: Accounting
Nailed It! Construction (Nailed It! or the “Company”), an SEC registrant, is a construction company that manufactures commercial and residential buildings. On March 1, 20X1, the Company entered into an agreement with a customer, Village Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Village Apartments once the construction of the entire building is complete. In addition, Village Apartments has various design requirements that would require Nailed It! to incur significant costs to rework the building prior to selling it to a customer other than Village Apartments. To construct the apartment building, Nailed It! acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Village Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in a Village Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:
As of June 30, 20X1, in total, Nailed It! has purchased $75,000 of component parts. As of June 30, 20X1, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, Nailed It! has incurred $12,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended June 30, 20X1. •During the three months ended September 30, 20X1, Nailed It! purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 20X1. During the three months ended September 30, 20X1, Nailed It! incurred an additional $50,000 of direct costs to integrate the component parts into the Village Apartments construction project. •As of September 30, 20X1, Nailed It! determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.•As of December 31 20X1, the construction project was completed. During the three months ended December 31, 20X1, Nailed It! purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 20X1. Nailed It! has incurred $187,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended December 31, 20X1.
If Village Apartments cancels the contract, Nailed It! will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is considered to be a reasonable margin. Nailed It! will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by Nailed It!.
Required:
1.Does the performance obligation meet any of the criteria or recognition of revenue over time?
2.How should the entity recognize revenue for the satisfaction of its performance obligation? What amount of revenue should be recognized for the following periods:
2a.The three months ended June 30, 20X1?
2b.The three months ended September 30, 20X1?
2c.The three months ended December 31, 20X1?
1. If company Nailed It! changes its initial cost estimate from 1,000,000 to 1,250,000 on September 30, 20x1 how does that impact revenue. I have been trying to understand how to use the input method on recording the revenue to the Nailed it! case. Can anyone help me understand it better? I understand 2a, and 2b. I do not understand 2c. I do not understand how the costs are different and how it became a loss of -62,500 at the end of December 31,20x1
2. I would like to know also how to understand the journal entries that i would need to apply at the end of the yearr.
I have already submitted the case for review two times, and both times no one has been able to give me the solid answer to this.
In: Accounting
Bank Reconciliation and Entries
The Coins, currency (paper money), checks, money orders, and money on deposit that is available for unrestricted withdrawal from banks and other financial institutions.cash account for Collegiate Sports Co. on November 1 indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The A summary of all transactions mailed to the depositor or made available online by the bank each month.bank statement indicated a balance of $112,675 on November 30. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
Required:
1. Prepare a bank reconciliation as of November 30.
| Collegiate Sports Co. | ||
| Bank Reconciliation | ||
| November 30 | ||
| Cash balance according to bank statement | $ | |
|
||
| $ | ||
|
$ | |
|
||
| Adjusted balance | $ | |
| Cash balance according to company's records | $ | |
|
$ | |
|
||
| $ | ||
|
$ | |
|
||
| Adjusted balance | $ | |
Feedback
2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if a box does not require an entry, leave it blank.
| a. Nov. 30 |
|
||
|
|||
|
|||
|
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| b. Nov. 30 |
|
||
|
|||
|
3. If a balance sheet is prepared for
Collegiate Sports Co. on November 30, what amount should be
reported as cash?
$
In: Accounting
Tim opened the Emporium on March 1, 2017. During March, the following transaction were completed:
March 1 Issued 10,000 shares of common stock for
$25,000 cash
March 1 Purchased used servers for $10,000, paying
$6,000 cash and the balance on account
March 3 Purchased office supplies for $1,500 on
account
March 5 Paid $2,400 cash on 1-year insurance
policy effective March 1
March 14 Billed customers $4,200 for data analysis
services
March 18 Paid $1,500 cash on amount owed on servers and
$500 on amount owed on office supplies
March 20 Paid $2,750 cash for employee salaries
March 21 Collected $1,400 cash from customers billed on
March 14
March 28 Billed customers $6,200 for data analysis
services
March 31 Paid $350 for server maintenance which did not
extend the life or function of the servers
March 31 Declared and paid $900 cash dividend
Required:
1) Journalize the March transactions
2) Post to the ledger accounts
3) Prepare a trial balance at March
31
4) Journalize the following
adjustments
a. earned but unbilled and uncollected revenue at March 31 was
$800
b. depreciation on equipment for the month was $650
c. one-twelfth of the insurance policy expired
d. an inventory count shows $280 of office supplies on hand at
March 31
e. Incurred employee slararies but unpaid were $1,060
I HAVE COMPLETED THIS
MUCH-------------------(answers are below) -----Please help with
the remaining questions 5,6,7,8 and 9----------
5)
Posting adjusting entries to the general ledger
6) Prepare an adjusted trial
balance
7) Prepare the income statement and
a retained earnings statement for March and a classified balance
sheet at 3/31
8) Journalize and post closing
entries and complete the closing process
9) Prepare a post closing trial
balance at 3/31
| 1) Journal Entries : | |||
| Date | Accounts Titles | Debit $ | Credit $ |
| Mar 1 2017 | Cash | 25000 | |
| Common Stock | 25000 | ||
| 1 | Equipment | 10000 | |
| Cash | 6000 | ||
| Accounts Payable | 4000 | ||
| (purchase of used server) | |||
| 3 | Off. Supplies | 1500 | |
| AP | 1500 | ||
| 5 | Prepaid Ins | 2400 | |
| Cash | 2400 | ||
| 14 | AR | 4200 | |
| Service Revenue | 4200 | ||
| 18 | AP | 2000 | |
| Cash | 2000 | ||
| 20 | Salary Expense | 2250 | |
| Cash | 2250 | ||
| 21 | Cash | 1400 | |
| AR | 1400 | ||
| 28 | AR | 6200 | |
| Service Revenue | 6200 | ||
| 31 | Maintenance Exp. | 350 | |
| Cash | 350 | ||
| 31 | Dividend Exp. | 900 | |
| Cash | 900 | ||
| 2) T-Accounts - Ledger Accounts : | |||
| Debit Entries | Amount $ | Credit Entries | Amount $ |
| Cash a/c: | |||
| 1 | 25000 | 1 | 6000 |
| 21 | 1400 | 5 | 2400 |
| 18 | 2000 | ||
| 20 | 2750 | ||
| 31 | 350 | ||
| 31 | 900 | ||
| C/b | 12000 | ||
| Common Stock a/c: | |||
| 1 | 25000 | ||
| Equipment a/c: | |||
| 1 | 6000 | c/b | 10000 |
| 1 | 4000 | ||
| AP a/c : | |||
| 18 | 2000 | 1 | 4000 |
| c/b | 3500 | 3 | 1500 |
| Off. Supplies a/c: | |||
| 3 | 1500 | ||
| Prepaid Insurance a/c : | |||
| 5 | 2400 | ||
| AR a/c : | |||
| 14 | 4200 | 21 | 1400 |
| 28 | 6200 | c/b | 9000 |
| Service Revenue a/c : | |||
| c/b | 10400 | 14 | 4200 |
| 28 | 6200 | ||
| Salary Exp a/c: | |||
| 20 | 2750 | ||
| Maint. Exp. A/c : | |||
| 31 | 350 | ||
| Dividend exp. A/c : | |||
| 31 | 900 | ||
| 3) Trial Balance as on Mar 31, 2017 : | |||
| Accounts Titles | Debit $ | Credit $ | |
| CAsh | 12000 | ||
| CS | 25000 | ||
| Equipment | 10000 | ||
| AP | 3500 | ||
| Off. Supplies | 1500 | ||
| Prepaid Insu | 2400 | ||
| AR | 9000 | ||
| Service Revenue | 10400 | ||
| Salary exp. | 2750 | ||
| Maintenance exp. | 350 | ||
| Dividend exp. | 900 | ||
| Total | $38,900 | $38,900 | |
| 4) Adjustment Journal Entries : | |||
| Date | Accounts Titles and explanation | Debit $ | Credit $ |
| 31-Mar | AR | 800 | |
| Service Rev | 800 | ||
| Depreciation | 650 | ||
| Acc Dep - Equipment | 650 | ||
| Insurance exp | 200 | ||
| Prepaid Insu | 200 | ||
| off supplies exp | 1220 | ||
| off supplies | 1220 | ||
| (1500 - 280) | |||
| 31-Mar | Salary Exp | 1060 | |
| Salary payable | 1060 | ||
In: Accounting
Rogers Aeronautics, LTD, is a British aeronautics subcontract
company that designs and manufactures electronic control systems
for commercial airlines. The vast majority of all commercial
aircraft are manufactured by Boeing in the U.S. and Airbus in
Europe; however, there is a relatively small group of companies
that manufacture narrow-body commercial jets. Assume for this
exercise that Rogers does contract work for the two major
manufacturers plus three companies in the second tier.
Because competition is intense in the industry, Rogers has always
operated on a fairly thin 20% gross profit margin; hence, it is
crucial that it manage non-manufacturing overhead costs effectively
in order to achieve an acceptable net profit margin. With declining
profit margins in recent years, Rogers Aeronautics' CEO, Len
Rogers, has become concerned that the cost of obtaining contracts
and maintaining relations with its five major customers may be
getting out of hand. You have been hired to conduct a customer
profitability analysis.
Rogers Aeronautics' non-manufacturing overhead consists of $2.5
million of general and administrative (G&A) expense,
(including, among other expenses, the CEO's salary and bonus and
the cost of operating the company's corporate jet) and selling and
customer support expenses of $3 million (including 5% sales
commissions and $1,050,000 of additional costs). The accounting
staff determined that the $1,050,000 of additional selling and
customer support expenses related to the following four activity
cost pools:
|
Activity |
Activity Cost Driver |
Cost per Unit of Activity |
|---|---|---|
| 1. Sales visits |
Number of visit days |
$800 |
| 2. Product adjustments |
Number of adjustments |
1,300 |
| 3. Phone and email contacts | Number of calls/contacts |
50 |
| 4. Promotion and entertainment events |
Number of events |
2,000 |
Financial and activity data on the five customers follows (Sales and Gross Profit data in millions):
| Quantity of Sales and Support Activity | ||||||
|---|---|---|---|---|---|---|
| Customer | Sales | Gross Profit | Activity 1 | Activity 2 | Activity 3 | Activity 4 |
| #1 | $17.00 | $3.40 | 106 | 23 | 220 | 82 |
| #2 | 12.00 | 2.40 | 130 | 36 | 354 | 66 |
| #3 | 3.00 | 0.60 | 52 | 10 | 180 | 74 |
| #4 | 4.00 | 0.80 | 34 | 6 | 138 | 18 |
| #5 | 3.00 | 0.60 | 16 | 5 | 104 | 10 |
| $39.00 | $7.80 | 338 | 80 | 996 | 250 | |
In addition to the above, the sales staff used the corporate jet at a cost of $800 per hour for trips to customers as follows:
| Customer #1 | 24 hours |
| Customer #2 | 36 hours |
| Customer #3 | 5 hours |
| Customer #4 | 0 hours |
| Customer #5 | 6 hours |
The total cost of operating the airplane is included in general and administrative expense; none is included in selling and customer support costs.
a. Prepare a customer profitability analysis for Rogers Aeronautics that shows the gross profits less all expenses that can reasonably be assigned to the five customers.
Notes:
| Customer #1 | Customer #2 | Customer #3 | Customer #4 | Customer #5 | |
|---|---|---|---|---|---|
| Sales | Answer | Answer | Answer | Answer | Answer |
| Cost of goods sold | Answer | Answer | Answer | Answer | Answer |
| Gross profit | Answer | Answer | Answer | Answer | Answer |
| Less expenses | |||||
| Sales commissions | Answer | Answer | Answer | Answer | Answer |
| Sales visits | Answer | Answer | Answer | Answer | Answer |
| Product adjustments | Answer | Answer | Answer | Answer | Answer |
| Phone and other remote contacts | Answer | Answer | Answer | Answer | Answer |
| Promotion and entertainment | Answer | Answer | Answer | Answer | Answer |
| Corporate jet expense | Answer | Answer | Answer | Answer | Answer |
| Customer profitability | Answer | Answer | Answer | Answer | Answer |
| Customer return on sales | Answer | Answer | Answer | Answer | Answer |
b. Now assuming that the remaining general and administrative
costs are assigned to the five customers based on relative sales
dollars, calculate net profit for each customer.
Enter figures as complete numbers (with all zeros). For example, 1
million is 1,000,000.
Do not use negative signs with any answers.
Do not round during calculation G&A expenses. Round final
G&A expenses to the nearest whole number.
Round return on sales to one decimal place. (Ex: 10.4%)
| Customer #1 | Customer #2 | Customer #3 | Customer #4 | Customer #5 | |
|---|---|---|---|---|---|
| Customer profitability | Answer | Answer | Answer | Answer | Answer |
| Less G & A expense | Answer | Answer | Answer | Answer | Answer |
| Net customer profitability | Answer | Answer | Answer | Answer | Answer |
| Net customer return on sales | Answer | Answer | Answer | Answer | Answer |
In: Accounting
In: Advanced Math
In: Accounting
On March 1, Sather Co. sold merchandise to Boone Co. on account, $29,800, terms 2/15, n/30. The cost of the merchandise sold is $18,300. The merchandise was paid for on March 14.
Journalize the entries for Sather Co. and Boone Co. for the sale, purchase, and payment of amount due. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.
Chart of Accounts-Sather Co.
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sather Co. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Chart of Accounts-Boone Co.
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Boone Co. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Journal-Sather Co.
Journalize the entries for Sather Co. for the sale on March 1 and payment of the amount due on March 14. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
|---|---|---|---|---|---|
|
1 |
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2 |
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Journal-Boone Co.
Journalize the entries for Boone Co. for the purchase on March 1 and payment of the amount due on March 14. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.
PAGE 20
JOURNAL
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
|---|---|---|---|---|---|
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1 |
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2 |
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In: Accounting