ACCOUNTING 4 Your Motomart Project #500896 is being returned for the following reasons as a combination of these results in a failing grade:     It is not unusual to have the project returned as not graded

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ACCOUNTING 4

Your Motomart Project #500896 is being returned for the following reasons as a combination of these results in a failing grade:

 

 

It is not unusual to have the project returned as not graded.

It is evident that you have done a lot of work, which is good. The feedback is being provided to help you “tweak” what you have done in order to help meet the requirements for the project.

If you are don’t understand something about what needs to be done, then do not hesitate to telephone and speak with me. Students who do call, find it much easier to complete the project because they get a better understanding for what needs to be done as opposed to reading the written word and being unsure due to “interpretation”.

 

 

For Step 1:

You are to focus on the semi-fixed expenses and provide and explanation as to the “patterns” they present.

Also, you are to provide what is incorrect with the figures, not only their pattern. Think about whether the figures are right or wrong. What is it about the individual numbers that is not “right”? While you don’t have the “detail” as to how the numbers are arrived at, you are not speculating as to what the numbers should be. You are looking for what “does not make sense” with the numbers.

What is “not right” with the figures?

This has nothing to do with an analysis or falling within statistical parameters.

Take a close look at what is “different” and then explain why it should not be different.

 

This step is not about the ups and downs of the data. There are really no “outliers”.

But, in looking at each individual expense and thinking about how a business incurs the expense, there is one expense that does have an unusual pattern.

 

 

For Step 2:

There are 4 expenses that “stick out” as not being correct (there is something wrong with the figures). Again, while you don’t have the “detail” as to how the numbers are arrived at, you are not speculating as to what the numbers should be. You are looking for what “does not make sense” with the numbers.

This is the same thing that you are looking for in Step 1, except there are 4 expenses. Which ones and why?

 

There is one expense that has an unusual pattern. Every accounting period has expenses. For example, if rent is to be paid, then rent expense should have an amount. A hotel should have maintenance expenses every month. The amounts should also be reasonable. If expenses are within a certain range and all of a sudden there is an amount that is well outside of that range, then that is unusual. However, that is not the case with this data. Expenses can go up and down. You are not reporting this up and down. You are looking for the unusual pattern that also does not make sense.

 

For Step 3:

Overall looks good just double check to ensure your answers are accurate before resubmitting.

 

 

For Step 4:

Your figures are incorrect for this step.

You are missing the required work in the Excel file.

How did you arrive at the figures that you presented?

The worksheet has been provided for you to do the work for this step.

· There is a “60 Months” worksheet that has the 60 months of data already entered. There is a “Sample” worksheet that an example of how to calculate the R-sq.

· There is a “PLOT – SALARY” worksheet that shows how the FC, VC and R-sq figures are calculated for Salary.

· You need to copy the “PLOT-SALARY” worksheet and show your calculations and work just like is presented in the worksheet. It should look identical to this worksheet except for the unique figures.

 

What needs to be done is:

· Create new spreadsheets for each of the expenses. Use the PLOT-SALARY spreadsheet as a “template” for what needs to be done for each of the additional expenses.

 

· The calculated figures in the spreadsheet should be the same as those shown when you present Table 5. This is the supporting “work” for the figures. If they are not the same, no credit will be given.

 

· If the formulas in the cells are not provided or correct in the spreadsheets, no credit will be given. (Typing numbers into cells will not be given credit for. Formulas in cells for the figures must be provided.)

 

· The graphs on the spreadsheets also need to be included in order to be able to answer the four questions for this step.

 

 

 

For Step 5:

Rework this step based upon the corrected steps for the project. Answer the questions being asked for the step as it pertains to your findings in the project.

 

 

Please rework and resubmit the project for grading. If you have any questions, feel free to telephone me toll free at 1.888.427.1000, Monday thru Friday from 9am-4pm EST.

 

 

 

 

 

 

 

 

 

 

 

Step one

The semi-fixed expenses of demonstrators appear odd in its trend in the five years reflected in the table. The semi-fixed expense is odd since it has decreased in the second year and the fifth year as the number of new retail vehicles sold increase. The semi-fixed expense of demonstrators in the two years should increases as the sales increase. In addition, it increased in the fourth year as the NRVS reduced instead of decreasing.

The operating profits of the firm in the five years under analysis depict to be on a declining trend even as the sales revenues have been improving. The operating profit in 1984 stands at $2,885,969 while in 1985 is $3,828,255. Thus, one would expect the operating profit from 1984 to 1985 to improve. In contrast, the operating profit in 1985 declined from $263,828 to $112,314. Similarly, the same trend is reflected in 1987 to 1988 where the sales revenues have expanded while the net operating loss by the firm worsened. The undue trend of the operating profit is attributed to the trend of the semi-fixed expenses. The semi-fixed expenses are increasing at a higher rate compared to the change in net revenue generated. Consequently, the firm has been facing undue trend of operating profit since the increasing revenue is not able to match the expanding amount of the semi-fixed expenses.

Step 2

One of the semi-fixed expenses an odd pattern is the vacation semi-fixed expense due to its inconsistent amount in different months compared to the number of NVRS. Similarly, the supply/tool/laundry expenses reflect an odd pattern due to some periods experiencing huge costs while the NVRS are low. Furthermore, the freight semi-fixed expense has an odd pattern due to high costs as NVRS are low, while low once NVRS are high. The demonstrator’s semi-fixed expense also, has odd pattern due to inconsistent movement depending on the NVRS in the different months. Similarly, the Floorplan has an unusual pattern as it indicates the cost is high when few during time of few NVRS.

Step 3

Salary high measure = $124,805 in month 53

Salary low measure = $45,491 in month 11

Vacation high measure = $9,212 in month 17

Vacation low measure = $160 in month 42

Adv/Trn high measure = $38,616 in month 38

Adv/Trn low measure = $9,112 in month 37

SplyTls/Lndry high measure = $14,426 in month 47

SplyTls/Lndry low measure = $(684) in month 28

Freight high measure = $1,628 in month 19

Freight low measure = $(492) in month 58

Vehicles high measure = $3,175 in month 22

Vehicles low measure = $486 in month 60

Demo’s high measure = $4,517 in month 48

Demo’s low measure = $(3,513) in month 59

Floor-plan high measure = $188,040 in month 60

Floor-plan low measure = $(78,173) in month 1

Total high measure = $352,182 in month 60

Total low measure = $2,772 in month 1

 

 

Step 4

Column	Expense	Fixed Cost	Variable Cost	R-squared
1	Salaries	$106,866	-$110	4.10%
2	Vacation	$1415	$2.817	0.6%
3	Advertising and training	$24,348	$0.015	0%
4	Supplies/tools/laundry	$8,269	$22.27	9.2%
5	Freight	$430.3	$0.319	0.1%
6	Vehicles	$1809	$0.179	0%
7	Demonstrators	$1,305	-$6.763	3.8%
8	Floor planning	$80,537	-$399.6	28.3%
	Computed total	$224,979	-$491	46.10%
9	Total	$22,475	-$536.8x	24.6%

1. In determining the fixed cost, variable cost, and the R-squared value of the various expenses, the problem encountered was determining the values to reflect under the Y-axis and the X-axis.

2. The R-squared measures reflected for the various expenses are relatively low.

3. The slopes of the various expenses contain both negative and positive slopes.

4. The conclusion reflected in the completed table is not consistent to the high-low effort.

Step 5

The analysis undertaken on the semi-fixed expenses the Motomart Company demonstrates how such data can be applied in preparing financial report. However, the financial data derived from Motomart Company reflects reflect they cannot be used to generate reliable financial report. The inconsistencies on the pattern of the semi-fixed expenses in different months reflect the data have potential of misleading an analyst in preparing the financial statement of the company. Furthermore, the R-squared coefficients of the various expenses are highly above zero, which implies vary from the mean expense. Thus, if the Motomart is included in a large database employed in preparing its forecasted financial statement, it will highly be concerned on the accuracy of the expense amounts due to numerous inconsistencies. Thus, the forecasted financial statements cannot be relied upon.

The semi-fixed expenses demonstrated under table reflect a number of seasonal expenses incurred by the firm. One of the seasonal expenses experiences is the salary cost, which is higher on the 12th month of each year compared to other months. Similarly, the floor-planning component depicts an instance of seasonal expenses since it is higher at the end of each financial year compared to other months. Furthermore, the supply/tools/laundry expenses of the company are higher at the end of each financial year implying it is a seasonal expense. Consequently, Motomart employed the process of reducing costs by minimizing expenses within a given financial year.