Entertainmentnow.Com Case Study

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Entertainmentnow.com Case Study Dr. Zelazny Accounting 3365.001 November 26, 2012 Group Members: Katherine Barr Jerrod Wesley Cameron Brenton Stalcup Emily Wenzlaff Company Overview/Main Case Concepts Entertainmentnow.com is an international Internet retail Website offering an array of books, music, videos, DVDs, toys, and small electronics. The company has historically marketed and sold to individual consumers, but has recently expanded their market to serve corporate and institutional customers as well. The company purchases products from vendors, holds the products in inventory, and then fulfills customer orders directly. This business model is similar to Amazon.com’s, making them one of the company’s main competitors.…show more content…
Although cost of goods sold as a percent of revenues rose by half a percent, overall all cost of goods sold was less than budgeted, due to the lower average sales price. 2. Fulfillment costs increased from $2.50 to $2.53 due to a higher than expected cost of opening the new distribution center in Phoenix, Arizona. 3. Marketing expenses increased by $0.05 per unit due to the new advertising campaign to boost lagging sales. While it was indeed a higher expense, sales were boosted in the last quarter. 4. Technology and content expenses increased by $350,000, due to additional required Website maintenance, stemming from a significant increase in product offerings and in partnerships with other websites. Despite this, the per unit cost remained at $0.79. This increase was offset by a higher than expected sales volume. 5. General and Administrative expenses decreased by $250,000 as a result of lower-than-planned raises for employees. 6. Depreciation/Amortization remained consisted despite the increase in sales, thus the per unit breakdown shows a decrease in per unit costs. 7. Overall, the increase in net loss was primarily due to the lower-than-expected sales price and the increase in both marketing and fulfillment expenses. Variance Analysis | Actual Results | Flexible Budget | Flexible Budget Variance | Favorable/ Unfavorable | Revenue | $475,980,000.00 |

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