Trident ACC501 Module 1 CASE & SLP Latest 2019 JULY Question # 00603394 Course Code : ACC501 Subject: Business Due on: 07/31/2019 Posted On: 07/31/2019 12:18 PM Tutorials: 1 Rating: 4.7/5

ACC501 Accounting Fundamentals

Module 1 Case

Preparation of an Income Statement for The
Serious Reader Company

The first case of this course provides an
opportunity to prepare a segmented variable costing (contribution margin,
behavioral) income statement and analyze the information. This is a very small
company and the information may seem simplistic at first glance. Don’t forget
that numbers and hands-on practice best illustrate many basic accounting
concepts.

The Serious Reader Company is a small online
retailer operating out of a garage apartment. The owner buys books at garage
sales, thrift shops, library sales, and whenever an opportunity arises. The
company classifies all books into five categories based on cost of acquisition
and estimated sales price. See below for details about books purchased and sold
during the last year (20XX).

	Price Categories
	A	B	C	D	E
Units Sold	4,000	1,000	500	400	400
Unites Purchased	6,000	1,200	1,000	1,000	1,000
Resale Price	$4.00	$12.00	$20.00	$45.00	$60.00
Cost	$0.50	$4.00	$10.00	$20.00	$20.00

In addition to purchasing inventory (used
books), the company incurs some operating expenses.

Variable Operating Expenses
Shipping per book	$1.50
Common fixed expenses
Internet-related costs	$10,000
Travel, etc.	$4,000
Advertising	$1,000
Other overhead	$5,000

Case Assignment

Required:

Computations (use
Excel)

• Prepare a segmented variable costing (behavioral) income
  statement for the company in good format.
• Prepare a second variable costing statement assuming 90% of
  all the books in each category purchased were actually sold.
• Prepare a third variable costing statement assuming that the
  price is increased by 50% for all five categories (use original sales
  information).
• The owner enjoys the used-book business. Any suggestions as
  how to turn this into a full-time business venture so the owner can quit
  his other job? Prepare another income statement to support your idea.

Memo (use Word)

Interpret the results from the computations
and explain how the information is useful. Write a 4- or 5-paragraph memo to
the owner of the business. Start with an introduction and end with a
recommendation. Each of the four or five paragraphs should have a heading.

Short essay to
comment on the questions below (use Word). Start with
an introduction and end with a summary or conclusion. Use headings. Maximum
length of two pages.

• Why do many organizations make the effort to prepare a
  different type of income statement for internal purposes?
• Variable costing is not just about preparing income statements.
  Provide at least three scenarios in which understanding how costs behave
  is useful.

Assignment
Expectations

Each submission should include two files: (1)
An Excel file; and (2) A Word document. The Word document shows the memo
first and short essay last. Assume a knowledgeable business audience and
use required format and length. Individuals in business are busy and want
information presented in an organized and concise manner.

ACC501 Accounting Fundamentals

Module 1 SLP

You are applying for a managerial position at
an innovative and rapidly growing company. This is a dynamic company that wants
an individual who adds value to the organization. Managers at this company wear
many hats, so the position requires managing products, people, and financial
aspects of running the company.

As part of the interview process, you are
required to make a presentation covering four different topics, one per module
for this course.

You choose the company and the new product
that you want to showcase in your presentation. It can be real or fictitious
(based on an industry). This is for background purposes only. The presentation
is to showcase your abilities and what you can contribute to the organization.

IBIS World (access on the Portal through the
Online Classroom & Library, Additional Library Resources
link) andBizStats have estimates of cost of goods
sold and some other categories of operating expenses. Information about
contribution margins is not available, but adding new products typically mean
incurring both fixed and variable costs. Consequently, cost of goods sold is a
reasonable estimate. Net operating income as a percentage of sales or some
variation thereof may also be relevant if the new product is expected to
contribute significantly to the bottom line. As a candidate for a position you
would not have internal information available, but being resourceful and being
a skilled researcher are desired traits for the position. IBIS World also has a
wealth of other market statistics that may be helpful. Use listed background
material and other resources as needed.

Required:

Include the following items in your
presentation.

• Present an idea for a new product.
• Describe the product.
• Show some cost estimates and pricing suggestion for this
  product based on research.
• What approach would you use to determine selling price (for
  example cost plus or target costing)? It is important when choosing a
  design.
• Explain your rationale for the pricing approach.
• Show expectations of growth and potential profit.

SLP Assignment
Expectations

Submit a PowerPoint presentation or a Word
Document. A PowerPoint presentation should have no more than six slides and a
Word document cannot exceed two pages. Use words, tables, and graphs to make a
succinct presentation. Document all sources and provide links at the end. It is
acceptable to add another slide or page to list the sources.