Jesterhead
Financial Distress and insolvency Course
1
The Assignment is out of 30 marks. Each question is worth L0 marks.
Question 1
The Book & Game Company has bookstores in two locations: Auntie's and authority Merlin's. Each locatio.t hrs a'manager who has a great deal of decision Horvevei, advertising, irarket research, acquisition of ,fr" individual stores. "".r , Iegal servicer, ,.rd oth", staff functiort it" handled by a central office. The Uook B;;a& 6r*" Company's current accounting system allocates all costs to the stores. Results for 2012 were:
Merlin's
$3
ltem
Sales revenue
Total Compary
$700,000 450,000 2 50,000 61,000 45,000 60,000 15,000 60,000
Auntie's
$3
50,000
50,000
Cost of merchandise soid Gross margin Operating expenses:
Salaries and wages Supplies Rent and utilities
225,000
125,000 30,000
225,000
125,000
3
3,000
22,500
40,000 7,000 10,000 129,500
22,500
20,000 8,000 30,000 113,500 $ 11,500
Depreciation
Allocated staff costs Total operating expenses Operating income (loss)
-zrF00
s_zga
-q-8I99)
wages, supEach bookstore manager makes decisions that affect salaries and corpli"r, ,rrJ d.preciation. In c-onrrast, rent and utilities are beyond the managers' irol because'th" -r.rrg.rs did not choose the location or the size of the store' -- - -i"ppfies ,re ,arilble costs. Variable salaries and wages are equal to 8 percent a fixed cost' of th" .JJt of merchandise sold; the remainder of salaries and wages is costs are R.;;;jf,1il, ,"d d"pr".iation also are fixed costs. Allocated staffproportionunafof ,'t th. bookstores, but they are allocated as a fected by any event.
sales revenue.
that distin1. Using the contribution approach, prepare a performanceJeport that of the bookstore manager" g"irtrlr the performa.rce of erch bbokstore from 2. Evaluate the financial performance of each bookstore' 3. Evaluate the financial performance of each manager'
qr.rtio,
Talor
1
The Assignment is out of 30 marks. Each question is worth L0 marks.
Question 1
The Book & Game Company has bookstores in two locations: Auntie's and authority Merlin's. Each locatio.t hrs a'manager who has a great deal of decision Horvevei, advertising, irarket research, acquisition of ,fr" individual stores. "".r , Iegal servicer, ,.rd oth", staff functiort it" handled by a central office. The Uook B;;a& 6r*" Company's current accounting system allocates all costs to the stores. Results for 2012 were:
Merlin's
$3
ltem
Sales revenue
Total Compary
$700,000 450,000 2 50,000 61,000 45,000 60,000 15,000 60,000
Auntie's
$3
50,000
50,000
Cost of merchandise soid Gross margin Operating expenses:
Salaries and wages Supplies Rent and utilities
225,000
125,000 30,000
225,000
125,000
3
3,000
22,500
40,000 7,000 10,000 129,500
22,500
20,000 8,000 30,000 113,500 $ 11,500
Depreciation
Allocated staff costs Total operating expenses Operating income (loss)
-zrF00
s_zga
-q-8I99)
wages, supEach bookstore manager makes decisions that affect salaries and corpli"r, ,rrJ d.preciation. In c-onrrast, rent and utilities are beyond the managers' irol because'th" -r.rrg.rs did not choose the location or the size of the store' -- - -i"ppfies ,re ,arilble costs. Variable salaries and wages are equal to 8 percent a fixed cost' of th" .JJt of merchandise sold; the remainder of salaries and wages is costs are R.;;;jf,1il, ,"d d"pr".iation also are fixed costs. Allocated staffproportionunafof ,'t th. bookstores, but they are allocated as a fected by any event.
sales revenue.
that distin1. Using the contribution approach, prepare a performanceJeport that of the bookstore manager" g"irtrlr the performa.rce of erch bbokstore from 2. Evaluate the financial performance of each bookstore' 3. Evaluate the financial performance of each manager'
qr.rtio,
Talor