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Harman [31]
3 years ago
12

SNC is considering evaluating the payment profile of its customer base, especially focusing on customers who are chronically del

inquent in paying invoices. Super Sports Centers-a national, mall-based, upscale fitness network and a key SNC customer (accounting for 20% of SNC's overall sales)-routinely takes almost 200 days to pay its invoices. That far exceeds the 90-day average collection period for SNC's other customers. If SNC drops Super Sports Centers from its customer base, sales will decrease by $2 million. However, the cash-flow measure of days sales outstanding (DSO) will quickly improve. What would you like to do about this opportunity?
2013 2014 2015 Post 2015
Incremental Summary
Income Statement
($ in thousands)
Sales -$2,000 -$2,000 -$2,000 -$2,000
Cost of Sales -$1,870 -$1,870 -$1,870 -$1,870
EBIT -$130 -$130 -$130 -$130
Incremental Balance Sheet
($ in thousands)
Accounts Receivable -$1,096 -$1,096 -$1,096 -$1,096
Inventories -$461 -$461 -$461 -$461
Accounts Payable -$210 -$210 -$210 -$210
Business
1 answer:
worty [1.4K]3 years ago
4 0

Answer:

I would decline the proposal to drop Super Sports Centers.

Explanation:

In order to be able to accept or decline dropping SSC as a customer we must first calculate the cost of being paid after 200 days.

If you analyze it from an accounting point of view, dropping SSC will decrease your operating profits by $130,000 and that might result in your firm not being able to make a profit anymore.

In my opinion, the cost analysis is not complete because in order to calculate EBIT your are simply subtracting COGS from revenue (which is correct but incomplete). When you make important business decisions, you must determine which is the least of evils. Is reducing your DSO so important that you will risk going bankrupt? How much does financing SSC costs? Since SCC takes so long to pay, you should probably record the present value of the sale (similar to a non-interest bearing note).

You must also remember that if your total sales decrease by 20%, your COGS will increase since fixed costs per unit will increase. Probably the best way to understand this is to analyze the situation like a special order sale. SNC should probably calculate their manufacturing (or retailing) costs without SSC and that way they will be able to determine the real advantage or disadvantage of having SSC as a client.

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Choose one of the options below for discussion. Be sure to elaborate and explain.
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<u>Solution and Explanation:</u>

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The EEOC has the position to research charges of oppression bosses who are secured by the law. Through their examination, they assume a job to decently and precisely evaluate the claims in the charge and afterward make a finding. On the off chance that any segregation, EEOC attempts to settle the charge. It has the power to record a claim to secure the privileges of people and the interests of the general population and contests a little level of these cases. When choosing to record a claim, the EEOC considers a few factors, for example, the quality of the proof, the issues for the situation, and the more extensive effect the claim could have on the EEOC's endeavors to battle working environment separation.  

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3 years ago
If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to the a.work
BaLLatris [955]

If,at the end of the fiscal year, the conflicts from the standard are significant the disagreements should be transferred to the work in process account.

<h3>Variance In Fiscal Year</h3>

The fiscal year variant includes the number of assigning periods in the fiscal year and the number of unique periods. One can wait year in the Controlling component (CO).

<h3>Work In Process Account </h3>

Work in progress analysis involves following the amount of WIP in commodities at the end of an accounting span and allocating a cost to it for inventory valuation objectives, based on the percentage of consummation of the WIP items.

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2 years ago
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Mrrafil [7]

Answer:

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Explanation:

a. In order to calculate their cost we would have to make the following calculation:

cost of disposed trademarks= cost of trademark+trademark acquired-trademark at the end

cost of disposed trademarks=$2,016 million + $89 million -$ 1,703

cost of disposed trademarks=$402 million

b. In order to calculate their accumulated amortization at the time of disposal we would have to make the following calculation:

accumulated amortization at the time of disposal=amortization accumulated at the beginning+ amortization expense during the year-ammortization accumulated at the end

accumulated amortization at the time of disposal=$20+$3-$7

accumulated amortization at the time of disposal=$16 million

c. In order to calculate the gain (loss) on disposal of trademarks we would have to make the following calculation:

gain (loss) on disposal of trademarks= cost of trademark disposed-amortization expense during the year-proceeds from sale of trademark

gain (loss) on disposal of trademarks=$402-$16-$3

loss on disposal of trademarks=$383 million

7 0
3 years ago
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