Booker Jones Essay

11. Prepare a table that illustrates the percentage change in costs between the volume-based system and the strategic activity-based system.

In spite of huge increase in sales in large quarter, the profit and loss summary of the company shows that net profit before taxes decreased considerably from $14,800 in August of 1987 to $3,100 in September of the same year. Also net sales and gross profit margin decreased in this period. All this can be attributed to huge inefficiencies that exist in the manufacturing processes of Donner.

2. Considering your answer to item 1, the first three exhibits, and related introductory discussion, is it likely that the accounting system may distort product profit significantly? Why? (Ignore general, selling, and admin expense.)

In 1984, Harnischfeger’s reported profits during each of the four quarters, ending the year with a pre-tax operating profit of $5.7 million and a net income after tax and extraordinary credits of $15 million. So I think that this action was motivated by business considerations, since the accounting practices were not the best. These actions made profits look positive.

b. The inventory write down recorded, as an expense by the company is $4.4 million. It is measured at lower of cost and net realizable value. Cost is measured by weighted average using standard cost method or

The $320,000, on the other hand, is a fixed cost associated with the proposed addition.

From the chart above we can see that Jones Apparel Group has surpassed Liz Claiborne in profitability four out of the last five years. Standing out among the profitability figures is Jones’ year ended 1998, in which the company eclipsed Liz’s profitability by over 2.5 percent. Jones’ profitability slipped substantially from year ended 1998 to 1999, from 9.19 percent to 5.98 percent. During Liz Claiborne’s same relative period, the company’s profitability fell only one tenth of a percent, from 6.68 percent to 6.58 percent. However, Jones Apparel Group battled back in year ended 2000 posting 7.29 percent profitability, as compared to Liz’s 5.95 percent figure, a differential of more than one and one-third of a percent. While these differences may seem quite arbitrary, Jones’ total revenues year ended 2000 were $ 4.14 billion compared to Liz Claiborne’s $ 3.10 billion. Net incomes for Jones and Liz were $ 301.9 million and $ 184.6 respectively. With dollar amounts this large, every hundredth of a percent counts.

The combination of these two factors reveals that while Martinrea’s profitability did improve in 2014, bucking the trend of previous years, the extent of this improvement is due in part to fluctuations in deferred taxes, which are entirely temporary have little correlation with improvements in the underlying business.

The depressed market in the mid-1980s caused a 1986 net loss of close to $1.8 million. Inventory turns were down to one and a half, and cash flow was poor. Facing these conditions, management adopted a new strategy stressing improvements in accounting performance and reduction of inventories. Their strategies for improvement included: increasing productivity, cost cutting

It is found that the fluctuations in sales over the last 5 years have an impact on the net profits of the company that is because the sales and profit has a direct relation between them that is increase in sales shows increase in net profit and vice versa.

Although revenues declined in 1999, net income increased by 13% over the prior year. As the graph below illustrates, net income has been volatile in the latter half of the 90 's. Sharp decreases in 1998 and 1999 net income were due to restructuring charges. If these charges had not been incurred, income would have been flat for both years. Efficiency in cost control and inventory management has allowed net income to increase while revenues decreased in 1999. Note that the largest growth rate was 43% in 1997 over the prior year with net income of $795.8 million.

Dell and its competitors Compaq, Gateway, and HP all have had their revenues increase over the period between 1991 and 1998. The companies differ when the net income is compared from the same time period. In the Appendix, Table 4: Profit as a Percentage of Sales shows a comparison between 1991 and 1998. Profit as a percentage of sales is a note worthy calculation because it shows a ratio of profits to sales. If a company has high sales it does not necessarily mean that it will have high profits. In Table 4, you see that in 1998 Dell has the highest profit as a percentage of

In 1973, after the installation of a new financial planning and control system at Boston Creamery, the ice cream division showed a favorable operating income variance of $71,700. In developing the profit plan for 1973, division president (and resident moron) Jim Peterson made the first of a series of inexcusable errors in budgeting surrounding the mythical “favorable” condition. He simply used expected results for the preceding year (as obtained in Oct. 1972), giving no consideration to factors like inflation, market growth, and the fact that sales goals should be expected to increase annually in a successful company. Peterson asked Frank Roberts, inept and underhanded VP of sales and

Unfortunately, Pizza Hut was declining profits in mid-1990s. During 1994, there were several changes resulted in the company's first declined in operating profits in 15 years. The pizza market was facing bearish and the fast food rivals cut prices. Moreover, investment in new outlets was draining the corporate resources. PepsiCo's restaurant division saw sales in restaurants open at least one year fall six percent in 1994, contributing to a drop in profits of 21

900,000 550,000 440,000 525,000 420,000 900,000 5 Problem 16-5 (a) (b) (c) (d) Materials inventory Accounts payable To record materials purchased. 550,000 Conversion costs Various accounts To record actual conversion costs incurred.