CONCEPTUAL CONNECTION When asked why she decided to buy Confiar, Adriana responded, “I think that Confiar offers more value than Drantex.” What are the possible sources of this greater value? What implications does this have for the managerial accounting information system?
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Adriana Alvarado has decided to purchase a personal computer. She has narrowed the choices to two: Drantex and Confiar. Both brands have the same processing speed, 6.4 gigabytes of hard-disk capacity, two USB ports, and a DVDRW drive, and each comes with the same basic software support package. Both come from mail-order companies with good reputations. The selling price for each is identical. After some review, Adriana discovers that the cost of operating and maintaining Drantex over a 3-year period is estimated to be $300. For Confiar, the operating and maintenance cost is $600. The sales agent for Drantex emphasized the lower operating and maintenance costs. The agent for Confiar, however, emphasized the service reputation of the product and the faster delivery time (Confiar can be purchased and delivered 1 week sooner than Drantex). Based on all the information, Adriana has decided to buy Confiar.
- CONCEPTUAL CONNECTION When asked why she decided to buy Confiar, Adriana responded, “I think that Confiar offers more value than Drantex.” What are the possible sources of this greater value? What implications does this have for the managerial
accounting information system ?
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- Adriana Alvarado has decided to purchase a personal computer. She has narrowed the choices to two: Drantex and Confiar. Both brands have the same processing speed, 6.4 gigabytes of hard-disk capacity, two USB ports, and a DVDRW drive, and each comes with the same basic software support package. Both come from mail-order companies with good reputations. The selling price for each is identical. After some review, Adriana discovers that the cost of operating and maintaining Drantex over a 3-year period is estimated to be $300. For Confiar, the operating and maintenance cost is $600. The sales agent for Drantex emphasized the lower operating and maintenance costs. The agent for Confiar, however, emphasized the service reputation of the product and the faster delivery time (Confiar can be purchased and delivered 1 week sooner than Drantex). Based on all the information, Adriana has decided to buy Confiar. CONCEPTUAL CONNECTION Suppose that Adriana’s decision was prompted mostly by the…Adriana Alvarado has decided to purchase a personal computer. She has narrowed the choices to two: Drantex and Confiar. Both brands have the same processing speed, 6.4 gigabytes of hard-disk capacity, two USB ports, a DVD drive, and each comes with the same basic software support package. Both come from mail-order companies with good reputations. The selling price for each is identical. After some review, Adriana discovers that the cost of operating and maintaining Drantex over a three-year period is estimated to be $300. For Confiar, the operating and maintenance cost is $600. The sales agent for Drantex emphasized the lower operating and maintenance costs. The agent for Confiar, however, emphasized the service reputation of the product and the faster delivery time (Confiar can be purchased and delivered one week sooner than Drantex). Based on all the information, Adriana has decided to buy Confiar. Required: 1 What is the total product purchased by Adriana? 2. How does the strategic…Adidas will put on sale what it bills as the world’s first computerized “smart shoe.” But consumerswill decide whether to accept the bionic running shoe’s $250 price tag—four times the average shoeprice at stores such as Foot Locker. Adidas uses a sensor, a microprocessor, and a motorized cablesystem to automatically adjust the shoe’s cushioning. The sensor under the heel measures compressionand decides whether the shoe is too soft or firm. That information is sent to the microprocessor, andwhile the shoe is in the air, the cable adjusts the heel cushion. The whole system weighs less than 40grams. Adidas’s computer-driven shoe—three years in the making—is the latest innovation in the $16.4billion U.S. sneaker industry. The top-end running shoe from New Balance lists for $199.99. Withrunners typically replacing shoes every 500 miles, the $250 Adidas could push costs to 50 cents per mile.Adidas is spending an estimated $20 million on the rollout.The investment required to develop a…
- Kate has put a lot of time and effort into streamlining the process to design and produce a greet- ing card. She has documented the entire process in a QuickTime video she produced on her iMac. The video takes the viewer through the step-by-step process of selecting hardware and software, and shows how to design and produce the card. Kate has met many people who would like to get into the production of greeting cards, but are overwhelmed by the process. Kate has decided to sell the entire package (hardware, software, and video tutorial) to aspiring card producers. The cost of the entire package to Kate is $4,500 and she plans to mark it up by $500 and sell it for $5,000. John Stevens, an individual Kate met recently at a greeting card conference, would like to buy the pack- age from Kate. Unfortunately, John does not have this much cash and would like for Kate to extend credit. Kate believes that many of her customers will not be able to pay cash and, therefore, she will need to find…Suppose that FedEx Kinko’s has decided to install personal computers and printers in its Pittsburgh store that will be rented to customers on an hourly basis. FedEx Kinko’s management has called in consultants from a number of computer suppliers to assist it in designing a system. After considering a number of alternatives, FedEx Kinko’s decided that an Apple computer system consisting of eight iMac computers and two printers best meets its current and projected future needs. FedEx Kinko’s evaluated the desirability of the acquisition of the Apple computer system using its normal capital budgeting procedures. It found that the computer system has a large positive expected net present value. Jim Horn, a new management trainee in the financial planning office, has recently been reading about the boom in the leasing industry. He feels that if leasing is growing as rapidly as it seems, there must be some significant advantages to the leasing alternative compared to ownership. If purchased,…Heriot and Watt are planning to open a small shop selling lunch boxes, which they will prepare on the premises. After experimenting for some weeks Heriot and Watt have arrived at two possible lunch box sets, which they think will be popular: Lunch Box A and Lunch Box B. As they can only prepare one lunch box on the premises, they need to decide, which one to choose. The following information is available: You are tasked to help Heriot and Watt to make their decision and provide the information below: (a) What is the break-even point for both options? (b) What profit would the expected sales of each option achieve? (c) How many boxes of each option would Heriot and Watt have to sell if they wanted to achieve a profit of £800. (d) Heriot and Watt are considering a selling price increase of 10% for both lunch box options. How many boxes of each option would they have to sell to achieve a target profit of £900? (e) Based on the information calculated above (a – d) explain, which…
- The following is an excerpt from a conversation between Mark Loomis and Krista Huff. Mark is debating whether to buy a stereo system from Tru-Sound Systems, a locally owned electronics store, or Wholesale Stereo, an online electronics company.Mark: Krista, I don’t know what to do about buying my new stereo.Krista: What’s the problem?Mark: Well, I can buy it locally at Tru-Sound Systems for $1,175.00. However, Wholesale Stereo has the same system listed for $1,200.00.Krista: What’s the big deal? Buy it from Tru-Sound Systems.Mark: It’s not quite that simple. Wholesale Stereo charges $49.99 for shipping and handling. If I have Wholesale Stereo send it next-day air, it’ll cost $89.99 for shipping and handling.Krista: So?Mark: But, that’s not all. Tru-Sound Systems will give an additional 2% discount if I pay cash. Otherwise, they will let me use my VISA, or I can pay it off in three monthly installments. In addition, if I buy it from Tru-SoundSystems, I have to pay 9% sales tax. I won’t…Consider the following hypothetical sales scenario. A large community college buys and takes delivery of 50 iMac computers from a local Apple store. The invoiced price is $2,800 per unit and includes hardware, software essential to the functionality of the hardware, third-party software including Microsoft Office for Mac and Adobe Creative Suite, and two years of tech service and support. Apple uses vendor-specific objective evidence to determine unit prices of $2,500 and $300 for hardware and the essential software, respectively. The third-party software typically retails for $500 (but Apple purchases it at a 50% discount) and equivalent service and support contracts are $100 per year. The customer (the community college) can opt to purchase subsequent essential software and OS upgrades. Indicate how Apple should record gross revenue for the transaction at the time the customer takes delivery of the computers. Your response should include specific dollar amounts.PizzaRush, which is located in the general Los Angeles area, fares very wellwith its competition in offering fast delivery. Many students at the area universities and community colleges work part-time delivering orders made via the web at PizzaRush.com. The owner, a software engineering graduate of USC, plans to purchase and install five portable, in-car systems to increase delivery speed and accuracy. The systems provide a link between the web order-placement software and the in-car GPS system for satellite-generated directions to any address in the Los Angeles area. The expected result is faster, friendlier service to customers, and more income for PizzaRush.Each system costs $4600, has a 5-year useful life, and may be salvaged foran estimated $300. Total operating cost for all systems is $650 for the first year, increasing by $50 per year thereafter. The MARR is 10% per year. Perform an annual worth evaluation that answers the following questions:a. How much new annual revenue is…
- Kurt and Sam are planning to open a small shop selling lunch boxes, which they will prepare on the premises. After experimenting for some weeks Kurt and Sam have arrived at two possible lunch box sets, which they think will be popular: Lunch Box A and Lunch Box B. As they can only prepare one lunch box on the premises, they need to decide, which one to choose. a) What is the break-even point for both options? b) What profit would the expected sales of each option achieve? c) How many boxes of each option would Kurt and Sam have to sell if they wanted to achieve a profit of £800. d) Kurt and Sam are considering a selling price increase of 10% for both lunch box options. How many boxes of each option would they have to sell to achieve a target profit of £900? e)Based on the information calculated above explain, which option Kurt and Sam should choose: Lunch Box A or Lunch Box B. You should also consider if the information you calculated is sufficient for making an informed decision.You are considering adding a new software title to those published by your highly successful software company. If you add the new product, it will use capacity on your disk duplicating machines that you had planned on using for your flagship product, “Battlin’ Bobby.” You had planned on using the unused capacity to start selling “BB” on the west coast in two years. You would eventually have had to purchase additional duplicating machines 10 years from today, but using the capacity for your new product will require moving this purchase up to two years from today. If the new machines will cost $101,000 and can be expensed under section 179, your marginal tax rate is 21 percent, and your cost of capital is 10 percent, what is the opportunity cost associated with using the unused capacity for the new product?You are considering adding a new software title to those published by your highly successful software company. If you add the new product, it will use capacity on your disk duplicating machines that you had planned on using for your flagship product, “Battlin’ Bobby.” You had planned on using the unused capacity to start selling “BB” on the West coast in two years. You would eventually have had to purchase additional duplicating machines 10 years from today, but using the capacity for your new product will require moving this purchase up to 2 years from today. If the new machines will cost $113,000 and can be expensed under Section 179, your marginal tax rate is 21 percent, and your cost of capital is 14 percent, what is the opportunity cost associated with using the unused capacity for the new product? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)