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Welcome to your senior capstone project! You’ll begin your course by planning the meetings you’ll attend for your professional development assignment, which requires that you participate in two networking activities to expand your knowledge, experience, and contacts in the business world. Then you’ll analyze two cases that draw on and integrate much of the material you’ve learned throughout your business coursework. Both cases were developed from real fact patterns and real data.
Your professional development work requires you to evaluate, choose, and make arrangements to attend two workshops, business meetings, or similar events. You’ll also document your planning time and report on the activities you attended. By beginning with this assignment, you’ll be able to plan and attend your activities while you also work on the two cases.
Case 1 is from a firm called Purchase Point Media Corporation, or PPMC. PPMC was a thinly traded over-the-counter stock that issued some detailed financial projections. The data was presented in a very poor form; however, the substance and sequence of the data was organized in such a way that it was possible to compute a break-even point. You’ll study PPMC’s “Projected Statement of Net Income” and additional information provided, then integrate marketing and finance techniques to write a report on your findings.
Case 2 is quantitative and involves the analysis of selected financial data for a firm we’ll call “Motomart.” Motomart was a retail automobile dealership seeking permission to relocate in an area already served by a similar automobile dealership. The existing dealership brought a lawsuit to block the reloca- tion. Although the data provided by the company is flawed, you’ll prepare a summary of your observations and answer several questions about problems with the case.
Professional Development Project: PD Seminars and Community Networking
INTRODUCTION Professional development (PD) is an important aspect of business that enables you to network with other professionals, continue learning, and expand your business experience. For this part of your senior capstone project, you’ll plan, attend and reflect upon at least two approved workshops, conferences, seminars, or professional business meetings at the local, state, or national level. These activities or events must represent a learning experience that contributes to your development as a business professional.
You’ll earn credit for your 15 hours of assigned PD-related activities, including your attendance at two events. To receive credit, you must provide documentation of your planning efforts (approximately one hour for each event), your two approved professional-development activities (approximately three hours each), and a thoughtful report (approximately four hours) reflecting on and summarizing your professional- development activity and/or event.
Note: Read all the way through the assignment before you begin, to make sure you choose acceptable activities, collect the necessary information, and complete all the requirements for the project.
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OBJECTIVES When you complete this professional-development assignment, you’ll be able to
• Explain the benefits of professional-development activities
• Evaluate the professional-development potential of specific workshops, conferences, seminars, and professional business meetings
• Plan for and arrange to attend professional- development events
• Present your reflections on the value of professional- development activities
RECOMMENDED ACTIVITIES The following are suggested activities to consider for your professional development activities. There may be other opportunities in your area, but whether you choose one of the suggested activities or find something on your own, your instructor must approve your choices before you begin.
Attend a Local Chamber of Commerce Meeting
A local Chamber of Commerce meeting is a good place to meet people and to see what’s going on in business in your area. You can Google the U.S. Chamber of Commerce Web site or contact your local Chamber of Commerce for its meet- ing schedule. Spend some time navigating through the local Chamber’s Web site to familiarize yourself with their mission and/or vision statement, officers, members, and activities. Typically, local Chamber of Commerce Web sites provide information that’s valuable to the local members.
Rather than just showing up at a meeting, first call the local Chamber and speak with the staff. Tell them that you’re com- pleting a coursework assignment and would like a mentor, if available—someone willing to introduce you to Chamber
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members and assist you in learning more about the organiza- tion. Doing so will enhance the quality of your experience and afford greater success in both networking and maintaining your connection with new contacts.
Attend a Guest-Speaker Event at a College or University
Every college and university presents outside speakers to enrich their students’ education and to attract local leaders and community members to the campus. Look for a college or university event in your area that’s related to business, economics, or public-policy issues. Events are often publicized in newspapers and on the institution’s Web site. You may wish to call the university’s business department to ask if any public events are coming up or contact several institutions and ask to be placed on their mailing lists to receive e-mail or printed notices for these opportunities.
Attend an Institute of Management Accountants Chapter Meeting
The membership of the Institute of Management Accountants (IMA) includes professionals in accounting, finance, and information technology. The vast majority of those attending will be Certified Public Accountants (CPAs) and Certified Management Accountants (CMAs). However, the CMA exam, unlike the CPA exam, tests all business disciplines, so you also may find attorneys and real estate brokers at these meetings. Membership in each group will vary.
Begin planning to attend a local meeting by reviewing the IMA Web site. You should be able to locate a nearby IMA chapter on this Web site; if not, send an e-mail asking for the nearest group. Once you make contact, ask if they’ll recom- mend a mentor to introduce you to chapter members and improve the quality of your networking experience.
PROFESSIONAL DEVELOPMENT PLANNING TOOLS AND FORMS The following is a summary of your professional development (PD) planning tools and submission requirements. Check each step to help you organize and complete your assign- ments for this part of your capstone project.
1. Professional Development (PD)—What Counts
Read the “What Counts” requirements and the section on self-evaluation and planning before you choose your PD activities. Then discuss your ideas with your instructor and make sure you have approval for the activities before you attend.
2. Self-Evaluation and Planning Framework
use the criteria to plan your intended PD activities and to evaluate their value after you complete them. If you’re not satisfied with the potential value of one or both of them, look further to find a more worthwhile experience. For instance, you may live in a small town and learn that your local Chamber of Commerce or business pro- fessionals’ organization has a very small membership and isn’t very active. You might decide to call an organi- zation in a larger community or a nearby city to make arrangements to attend their meeting instead. On the other hand, if you plan to work in your small town, the local group might be a better choice, since any contacts you make through networking will be more helpful you once you’re working.
3. Professional Development Sessions Essays
During or immediately after an event, make notes on the people you’ve heard speak, your mentor, and others you’ve been introduced to. Answer the questions and note the relationship of each aspect of your experience to your area of interest. Also note important points and new ideas that were part of the presentation or meeting discussion.
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4. Writing Guidelines
See the writing guidelines in the “Submitting Your Work” section at the end of this book.
5. Sessions Summary
Log the time you spend in planning, attending, and reporting on your PD sessions.
Professional Development Activities: What Does and Doesn’t Count To clarify what kind of activities are acceptable as professional development activities for your assignments, use the guide- lines that follow.
What Doesn’t Count
The following activities do not qualify as valid experiences for your professional-development assignment:
• Staff meetings at work with your present employer— these are required as part of your current employment and don’t contribute to the development of new PD skills or experiences.
• Mentoring others—the PD experience should represent a new or novel experience and be directed by others.
• Time spent reading a book, an activity that’s not interactive or directed by others.
• Renewal courses for current position or certifications, which are generally part of employment requirements.
What Does Count
The following activities do qualify as valid experiences for your professional-development assignment:
• PD activities outside of or beyond the minimums required by your current employer
• Workshops, seminars, or meetings held by local profes- sional societies, including the American Marketing
Association, American Management Association, Institute of Management Accountants, Society of Certified Public Accountants, or others closely linked to your area of interest and associated with your degree program
• PD activities requiring involvement and exposure to the local community, such as a local Chamber of Commerce meeting where the agenda includes the approval process for new or local businesses; a local, significant college or university seminar; a conference or presentation by relevant guest speakers
• Other PD activities approved by your instructor
Self-Evaluation and Planning Framework Use the following criteria to evaluate your proposed professional- development activities. Make sure your plan meets each standard in relation to your area of interest or specialization. If an activity doesn’t meet the criteria, continue searching until you find one that does.
Make sure each activity meets the following criteria:
• It’s relevant to your area of interest.
• It provides significant interaction with business professionals.
• It has potential to improve your future achievement in business.
• It offers a significant opportunity for learning.
• It provides an opportunity to integrate what you’ve learned in your business and writing courses.
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Your Professional Development Sessions Essays You must complete one essay for each PD event you attend. Essays will be graded according to the guidelines provided. Essays that don’t meet minimum criteria may, at the instruc- tor’s discretion, be returned to the student for revision.
Note: Read the project submission instructions at the end of this book before beginning your session essays.
Each essay should be well written and should describe your activity and present your opinion on the applicability of your new knowledge and PD experience. Each PD experience will be unique, depending on your interests, expectations, and results.
Make sure you answer the following questions:
• What were the educational benefits of the PD experience?
• Did you meet people who work in your area of interest? If so, how do you plan to stay in contact with them?
• Were you able to use your education and prior course- work experiences to identify any theoretical or methodological strengths or weaknesses in the materials presented for your PD experience?
• How will you apply the PD experience to your future professional goals and objectives?
Writing Guidelines Briefly describe the content of the session (fewer than 750 words, typed, double-spaced). Include a description of how you prepared for your PD session, what you expected prior to participating in it, and how this compared with your actual PD experience. Where possible, reflect on how your session relates to the coursework you’ve completed.
Refer to the “Submitting Your Work” section at the end of this section for details on submission requirements for the Professional Development Project.
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Grading Criteria Your assignments will be evaluated according to the following criteria:
Content 80 percent
Written Communication 10 percent
Format 10 percent
Here’s a brief explanation of each of these points.
The student:
• Fulfills each assignment completely, answering all questions and fully addressing the topics and issues presented
• Writes answers in complete sentences and well-developed paragraphs
• Supports his or her judgment by citing specific informa- tion from coursework, textbooks, or other appropriate references, using correct APA or MLA guidelines for citations and references
• Stays focused on the assigned issues
• Writes in his or her own words and uses quotation marks to indicate direct quotations
Written Communication
The student:
• Addresses each section in complete paragraphs that include an introduction, a complete answer or explanation for each issue, and a conclusion.
• Uses correct grammar, spelling, punctuation, and sentence structure
• Provides clear organization (for example, uses words like first, however, on the other hand, and so on, consequently, since, next, and when)
• Makes sure the paper contains no typographical errors
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The paper is double-spaced and typed in font size 12.
It includes the student’s:
• Name and complete mailing address
• Student number
• Course title and number (Senior Capstone: Business, BUS 450)
• Correct research project number for each submission: Professional Development Seminar 50089400
Sessions Summary In addition to writing your summary or report, you must log the time you spend on preparation, event attendance, and writing the report. Record your PD activity hours on a separate page and send it to your instructor with your reports. Use the information below to create your time log.
Professional Development Session Summary Senior Capstone: Business
Include a separate “sessions summary” page when you send your PD activity reports to the school. Record a PD activity summary for each of your two required experiences using the following guidelines:
Your name and student number
Event information and contact hours Include the name of the activity and attach a copy of the agenda or flyer, if available
Date and time of session
Names of instructors and/or presenters (include titles and credentials)
Preparation hours Preparation date(s) and number of hours spent planning
Activity hours Event start time and end (subtract break time from total hours)
Reflection/summary hours Time spent on your summary report preparation, including date(s) and hours
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Case 1: Purchase Point Media Corporation (PPMC)
INTRODUCTION This case is based on actual financial projections developed and provided by a publicly traded firm, Purchase Point Media Corporation (PPMC). Carefully examine the PPMC projections, which are presented in a sequence and format suitable for break-even calculation and analysis. After you calculate the break-even point, use additional, publicly available informa- tion to come to a decision with respect to market potential. The increase in the price per share of PPMC stock suggests that, over time, the market may have reacted to their results and analyses, using a comparable methodology.
OBJECTIVES When you complete this case, you’ll be able to
• Identify discernable errors, irregularities, and impropri- eties in style and format within publicly reported data
• Meet financial statement presentation requirements for a specific “real world” example
• Determine whether financial information provided follows generally accepted accounting principles (GAAP) or is presented in “good form”
• Distinguish between the substance and form of financial statements
• Estimate variable and fixed costs for a publicly traded company
• Assess publicly disseminated information from publicly traded companies to determine the feasibility of market potential and market penetration
• Exercise enhanced critical-thinking skills
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CASE BACKGROUND Purchase Point Media Corporation (Pink Sheets: PPMC) is what some refer to as a thinly traded “corporate shell.” The firm held patents in the United States, Canada, United Kingdom, and Germany for a shopping-cart display device, but was a nonreporting and nonoperating entity.
On March 18, 2002, PPMC reported its intention to sell these patents and related trademarks. The initial estimates sug- gested a stock price of nearly $2.50 per share, before related per-share deductions for sale-related broker’s commissions and legal fees. At the time of the news release, the firm’s stock was trading at $0.04 per share. In less than 60 days the stock was trading at more than $0.60 per share (Cataldo 2003, 55–60), for a 1,400 percent increase in price per share. (Note that investors and speculators alike would view this as a very risky investment, and the price per share for PPMC stock would be expected to fall short of or sell at a significant discount to the “anticipated” selling price for the firm’s intan- gible assets. See Arbel and Strebel 1982 and 1983; Arbel, Carvell and Strebel 1983; and Arbel 1985 for guidance on thinly traded or “neglected” firms.)
While this initial news release attracted speculators, causing the stock price to rise, after months without any additional news releases, the stock price drifted down again. On August 20, 2003, PPMC again announced its intention to sell the firm’s intangible assets (Business Wire 2003).
In the second announcement, PPMC management referred interested investors to their corporate Web site. Among the data provided, PPMC included a financial projection and other items they felt might be of interest to potential pur- chasers of the firm’s intangible assets (see Exhibit 1, Purchase Point Media Corp. statement, which follows).
To begin this case, review and comment on the “form” of the public disclosure circulated by PPMC. Then use the “substance” of this information to develop per-unit, sales- based contribution margins and break-even points for the first year of operations. Last, gather other publicly available information to determine the market feasibility of achieving its break-even point.
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Brand Name versus Generic Stocks
Graphs Supplemental information is provided in Figures 1 and 2. Figure 1 illustrates the price per share for PPMC common stock for the time period August 20, 2003 through September 27, 2004. The latter date represents the specific event when PPMC filed their 10QSB. Figure 2 compares the PPMC price per share with comparable index measures, such as the Dow Jones Industrial Average, Standard and Poor’s 500, NASDAQ, and Russell 2000 indices, for the same period of time.
Brand Name Stocks Generic Stocks
Less information risk More information risk
Higher quality of information Lower quality of information
Large sample of consensus estimates
Small or no sample of consensus estimates
Monitoring service or fee No monitoring service or fee
Lower return Higher return
Higher price (premium) Lower price (discount)
Lower uncertainty Higher uncertainty
More consistency Less consistency
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FIGURE 1—The price per share for PPMC common stock, August 20, 2003 through September 27,
2004, when PPMC filed their 10QSB
FIGURE 2—Comparison of the PPMC price per share over comparable index measures, such as the Dow
Jones Industrial Average, Standard and Poor’s 500, NASDAQ, and Russell 2000 indices, for the same
time period
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References Arbel, A. 1985. Generic Stocks: An old product in a new package. The Journal of Portfolio Management 68: 4–13.
Arbel, A., Carvell, S., and Strebel, P. 1983. Giraffes, Institutions and Neglected Firms. Financial Analysts Journal 39: 57–63.
Arbel, A., and Strebel, P. 1982. The Neglected and Small Firm Effects. The Financial Review: 201–18.
Arbel, A., and Strebel, P. 1983. Pay attention to neglected firms! The Journal of Portfolio Management 9: 37–42.
Business Wire. 2003. Purchase Point Media Corp.: Corporate Update (August 20).
Cataldo, A. Information Asymmetry: A Unifying Concept for Financial and Managerial Accounting Theories (including illustrative case studies). Studies in Managerial and Financial Accounting 13, 2003. Oxford, England: Elsevier Science (JAI). Series Editor: Marc Epstein.
PROJECT REQUIREMENTS The project requires three steps to be presented.
Step 1 – Identify Form and Substance Errors.
Step 2 – Compute the Purchase Point Media (PPMC) break-even points in terms of carts and stores.
Step 3 – Determine the number of grocery stores for various food chains.
In one Word document, provide individual sections for each Step. This Word document along with the Excel file (described below for Step 2) will be uploaded when you click on the Take Exam button on your Student Portal to submit your project (described under the “Submitting Your Assignment” later in the instructions).
This Senior Capstone project highlights your knowledge and the skills you have developed over the course of your education. There is nothing “new” to be learned here.
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The knowledge and skills required for this project include English Composition, Financial Accounting, Managerial Accounting, Information Literacy and the abilities to think critically, do research and to present your work in a professional manner.
If you are unsure or don’t understand something about the project, then go back to your previous subjects to review. For example, if you don’t remember how to make a proper citation, then revisit your English Composition to see how to make a correct citation. Or, if you don’t remember how to calculate a break-even point, go back to Managerial Accounting and review the subject matter pertaining to that concept.
Remember, there is nothing “new” here. Everything about this project you should already know how to do.
Substance versus Form and Critical Thinking
Step 1
In the infamous Enron bankruptcy case, the form of the financial statements prepared by the Enron Corporation and WorldCom was very professional; however, the substance was lacking, leading to audit and market failures and the eventual bankruptcy of both of these big-cap, or large- capitalization firms. PPMC represents a reverse case, in which the form of the data contained in the PPMC news release and corporate Web site was very poor.
To begin, read the PPMC report, focusing on problems with the form of the report. (“Form” means spelling, punctuation, and capitalization are correct and that the text is grammatically correct. Also, form means that the format of the text as far as font, bold, underlining, indents, and so on are correct.) Prepare a typed, clearly communicated summary of all errors or weaknesses you find in the form of this report. This should be a numbered list. There are well over 30 form errors in the
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document. (The ways to go about doing this for this step is to think of yourself as an English Composition instructor and a student has turned in a required paper that was written.) Although the PPMC report isn’t well-written, don’t attempt rewrite the report. Only present a numbered list of the errors found.
To report the numbered list of form errors for this step, each error should have three components:
1. The location of the error.
2. What the error is.
3. How the text should have been written correctly.
Here is an example of how you’ll present the form errors.
Summary of Errors in the Form of the PPMC Report
1. Location: The first page of Exhibit 1, the last sentence of the first paragraph states “You should independently investigate and fully understand all risk before making investment decisions.”
Error: The word risk is singular. It should be plural.
Correction: It should have been written “You should independently investigate and fully understand all risks before making investment decisions.”
Next, reread the PPMC report, focusing on problems with the substance of the report. (“Substance” means the figures and data that are being reported and making sure the math is correct.) Identify the obvious errors or problems first by focusing on the addition or math errors. Prepare a typed, clearly communicated summary of all errors you find in the substance of this report. These should be presented in a numbered list.
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To report the numbered list of substance errors for this step, each error should have three components the same as the presentation of the form errors:
1. The location of the error.
2. What the error is.
3. How the text should have been written correctly.
The heading for the substance errors should be “Summary of Errors in the Substance of the PPMC Report”.
Do not take this step lightly. The data and figures found in the report are used to calculate the beak-even analysis for Step 2. As presented, the data is incorrect and therefore, the break-even analysis would be incorrect. Therefore, it is important that you find “all” of the substance errors and correct them as these corrected figures will be what you use to make the break-even calculations for Step 2.
Step 2
The PPMC Notes in the document appear to be organized by cost behavior. This is similar to the approach you used in your Managerial Accounting course. You should follow this approach or framework as you compute the PPMC break- even point in terms of carts and stores. Begin with revenues, follow with variable costs (VCs), develop the contribution margin (CM; in aggregate), followed by fixed costs (FCs), and, finally, compute PPMC’s net operating income (NOI) and break-even point in terms of both carts and stores.
On your Student Portal, under the Supplements section of the Senior Capstone subject is a downloadable Excel file titled “Exam 500895- PPMC Excel Spreadsheet”.
Step 2 requires that you calculate the break-even points for both carts and stores. Download this file and use it to calcu- late the breakeven points.
Reference the Excel spreadsheet for Step 2 in the Word docu- ment and include the spreadsheet as a separate file when submitting the project. The spreadsheet for the calculations is too large to include in a table in a Word document or be able to read if an Excel spreadsheet is inserted. Therefore,
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there should be two files submitted for the project – this Word document and the Excel spreadsheet with your work for Step 2.
The majority of the work has been done for you when using the spreadsheet. The setup to be able to calculate the CM, NOI and the break-even points are part of the spreadsheet. What you need to do to interpret the Notes from the PPMC document, input the data into the spreadsheet (be sure to use your “corrected substance” figures/data from Step 1), and do the calculations required to obtain the break-even point for the carts and the break-even point for the stores. (Hint: Some cells in the spreadsheet have comments inserted. Pay attention to these comments. For example, there is a comment in a cell that has the formula to be used to calcu- late the break-even point.)
Step 3
Step 3 requires three items:
1. The ticker symbol for the store chain.
2. The number of stores for the store chain.
3. A Works Cited page for the figures found as the number of stores.
Table 1 should be reproduced as a table in your Word document for Step 3 and the ticker symbol and the number of stores inserted from your own research.
To find the ticker symbol for each of the store chains, it is as easy as opening up Google Chrome as your web browser and typing in the store name followed by “ticker symbol” into the search box. The hits form the search should reveal the ticker symbol for that store. Alternatively, you could use a financial website such as Yahoo Finance, E-trade, and so on to do your searching. All of the stores have a ticker symbol with the exception of one which is a private company.
Using your own research skills and abilities, determine the number of grocery stores for each store chain. How you go about doing this is up to you and your research skills.
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Here is what you are looking for as far as the number of stores is concerned:
• You are looking for the most “current” information. However, current doesn’t mean today.
For example, if store A (which has 10 stores) took over store B (which had 3 stores) in a merger, then B is no longer in business. The number of stores for A will be 13 as of today because it is still in business. The number of stores for B will be 3 which is how many it had before the merger. That is the most current for B – not zero.
As another example, if a store declares bankruptcy, it all depends upon the bankruptcy status. If the store is in Chapter 11, which is reorganization then the number of stores will be the current information. If the store is in Chapter 13, which is a closing of the business, then the number of stores will be zero.
Be aware that the solution to the number of stores in the table is kept current, but that doesn’t mean that data will all be “as of today.” It is possible that the most current information might be 2015 or 2016. It all depends upon your research and what is available. Finding the correct information is the purpose behind doing research.
One other thing to watch out for in doing your research is a “name change.” If a store changes its name, then list both the old name and the new name and the current information available for the number of stores.
• You should rarely use third party sites such as Google Finance, InvestSnips, Investopedia, Wikipedia, newspa- per articles, and so on as these don’t have the most current and accurate information. You should use infor- mation from the business web site, SEC filings, Annual Reports, and so on for the most applicable, relevant and current information.
• Lastly, this step involves research. “Research” is not doing a quick search and picking a web site or two and going with what is found. Research is looking at quite a few sources and thinking critically about what is found as to relevancy, currency and accuracy. For example, one web
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page may say “about 500” stores, but, another page on the website will say “536 stores” exactly. Or one web site might have information from March 2016 and another might have information from December 2016. Which is more current and relevant? The December 2016 web site. Not only do you need to do research, but, you also must think critically about the information you find.
Along with Table 1, a Works Cited page needs to be included for Step 3. This is Standard English Composition. Work and/or figures that are not your own need to be cited as part of a paper.
If no citations are provided or the citations are not properly formatted, this becomes “Plagiarism” which is unacceptable at Penn Foster or in the workplace.
• There should be a correctly formatted citation for each fig- ure for the number of stores for the grocery store chain.
This is standard for English Composition and should fol- low MLA or APA formatting. If you do not remember how to make a correct citation, do a search on the Internet for “Purdue OWL” and when you get there search the OWL (Online Writing Lab) site for “MLA Works Cited: Electronic Sources (Web Publications)” as this is the most likely source you will use and refresh your memory. Alternatively, you can search Penn Foster’s Library for the Purdue Owl web site and/or telephone and speak with an English Instructor.
• The web address provided for the citation should take the reader directly to the web page where the number of stores can be found. The reader should not have to search for your information. Do not provide a generic web address such as the homepage of a web site unless the actual number of stores is on that web page.
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Writing Guidelines Refer to the “Submitting Your Work” section at the end of this book for details on submission requirements for the PPMC Case assignment.
Table 1
Stock Ticker No. of Stores Firm Name
KR Kroger
ABS Albertson’s
Winn-Dixie Stores
Publix Super Markets
Great Atlantic & Pacific
Smart & Final
Ingles Markets
Blue Square-Israel
Whole Foods Market
Weis Markets
Marsh Supermarkets
Nash Finch
Fresh Brands
Wild Oats Markets
Spartan Stores
Eagle Food Centers
Gristede’s Foods
Village Super Market
Foodarama Supermarkets
Arden Group
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Grading Criteria Your assignment will be evaluated according to the following criteria:
Content 80 percent
Written Communication 10 percent
Format 10 percent
Criteria Grade
Content 80 pts
• Identifies Form and Substance errors as instructed (worth 30 points)
• Completes Step 2 – Compute the PPMC break-even point in terms of
carts and stores (worth 40 points)
• Completes Step 3 – Determine the number of grocery stores in the
United States (worth 10 points)
Written Communication 10 pts
• Answers each question in a complete paragraph that includes an
introductory sentence, at least four sentences of explanation, and
a concluding sentence
• Uses correct grammar, spelling, punctuation, and sentence structure
• Provides clear organization by using words like first, however, on the
other hand, and so on, consequently, since, next, and when
• Makes sure the paper contains no typographical errors
• Properly formatted citations – (No Works Cited or incorrectly
formatted citations will result in a final grade of 1 for the project
due to Plagiarism.)
Format 10 pts
The paper is double-spaced, typed in font size 12, and contains properly formatted Internet research sources. It includes the student’s
• Name and address
• Student number, Course title and number, and project number
Total Grade %
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Case 2: Motomart
INTRODUCTION The Motomart case is designed to supplement your Managerial/ Cost Accounting textbook coverage of cost behavior and variable costing using real-world cost data and an auto-industry- accepted cost driver. Unlike textbook problems, this data is real. It won’t necessarily produce a clear solution when you attempt to analyze cost behavior and apply scatter-plot, high-low, and regression methods to separate mixed costs into their fixed and variable components. This case also illustrates that Financial Accounting decisions and methods can have an influence on Cost Accounting and Managerial applications and decisions.
OBJECTIVES When you complete this case, you’ll be able to
• Explain the importance of accrual accounting and proper application of the matching principle for the computation of contribution margins and break-even points
• Apply knowledge of generally accepted accounting principles (GAAP) to a specific real-world example
• Integrate statistical analyses and scatter plots, line graphs, and regression to determine the reliability of financial information prepared for external use
• Use analytical review procedures to examine a firm’s financial statements
• Apply critical-thinking skills to real-world business circumstances
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CASE BACKGROUND This case is based on real financial data provided by a retail automobile dealership (Motomart) seeking to relocate closer to an existing retail dealership. You’ll examine the mixed cost data from Motomart and apply both high-low and regression to attempt to separate mixed costs into their fixed and variable components for break-even and contribution margin compu- tations. You’ll find that the data is flawed because Motomart was a single observation in a larger database. Don’t attempt to correct the data (e.g., remove outliers or influential outliers). You’ll be producing a scatterplot and apply high-low and regression methods to the extent practicable and writing a summary report of the findings.
Motomart operates a retail automobile dealership. The manufacturer of Motomart products, like all automobile manufacturers, produces forecasts. It has long been an industry practice to use variable costing-based/break-even analyses as the foundation for these forecasts, to examine their cost behavior as it relates to the new retail vehicles sold (NRVS) cost driver. In preparing this financial information, a common financial statement format and accounting proce- dures manual is provided to each retail auto dealership. The dealership is required to produce monthly financial statements using the guidelines provided by this common accounting procedures manual, and then furnish these financial statements to the manufacturer. General Motors, Ford, Nissan, and all other automobile manufacturers employ similar procedures manuals.
The use of a common format facilitates the development of composite financial statements that can be used to estimate costs and produce financial forecasts for future or proposed retail dealership sites (Cataldo and Kruck 1998). Zimmerman (2003) suggests that as many as 77 percent of manufacturers divide costs into variable and fixed components, and that managers arrive at these estimates by classifying individual accounts as being primarily fixed or primarily variable (67).
For this case, you’ll examine mixed costs as defined by the manufacturer. Using the scatterplot, high-low, and regression methods, separate these mixed costs into their fixed and
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variable components. The data is problematic, and a clear solution won’t exist. Don’t attempt to correct the data by removing outliers, but make observations based on any pat- terns you observe. The case will expose you to actual data and require you to summarize your findings, including any conclusions you’re able to reach and why the financial data makes it impossible to separate the mixed costs into their fixed and variable components.
Motomart: A Litigation Support Engagement The Motomart case evolved from a litigation support engage- ment. The lead author of this case was hired to analyze the data and provide expert testimony. His report and testimony was made available to the public (for a fee to cover reproduc- tion costs). A broad description of the relevant points for the Motomart case follows.
Motomart wanted to move their retail automobile dealership, blaming their location for declining profits and increasing losses. They provided financial projections, using variable costing, to show that after relocation both Motomart and the existing dealership would be profitable. They created these financial projections using a database provided by the manu- facturer, which included all North American retail automobile dealerships. Motomart was one of the observations or retail automobile dealerships included in the database used to create these financial projections. You’ll be examining portions of Motomart’s historical financial data.
The relocation site was quite close to the existing dealership (which we’ll refer to as Existing Dealer), and Existing Dealer felt that, if the relocation was permitted, one or both of the dealerships would fail to break even and eventually go bank- rupt, leading to poor service, or what the industry refers to as “orphaned” owners of these automobiles.
Antitrust laws provided Existing Dealer with the means to block the relocation requested by Motomart, but only if it could prove that the relocation wasn’t in the best interest of the consuming public. Generally, the only way to prove this
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is to prove that there’s simply not enough business for both retail automobile dealerships to break even (or generate a reasonable return on investment, given the risks associated with the industry). Again, the manufacturer, in support of the proposed Motomart relocation, supplied financial projections showing that both retail automobile dealerships would be profitable after the relocation.
The expert witness hired to investigate the merits of the relocation was given the Motomart data, but not the entire database that included the Motomart data. The Motomart data was in such poor form that it wasn’t possible to produce a financial forecast. An alternative forecast, not included in this case, was produced. This alternative forecast did not support the relocation of Motomart to a site closer to Existing Dealer. The alternative forecast showed that the market simply couldn’t support two retail automobile dealerships. The impli- cation was that, as the weaker of the two dealerships, Motomart was losing business to Existing Dealer. In conclusion, the relocation request by Motomart was denied.
Income and Expense Data The following tables give you information such as income statements, semi-fixed expenses, and salaries for Motomart. Look for unusual entries or discrepancies in their records and, where you can, note the cause of the problems.
Table 3 summarizes financial and cost driver information produced by Motomart, where new retail vehicles sold (NRVS) is the cost driver. The account classification method has resulted in three cost behavior classifications: variable, semi-fixed, and fixed costs. Semi-fixed is the automobile industry-specific term used for mixed costs. We’ll assume that Motomart’s classifications of variable costs (VCs) and fixed costs (FCs) are correct, and focus our analysis on Motomart’s semi-fixed or mixed costs.
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Table 3 provides five years of monthly data (N=60) for NRVS and the related semi-fixed or mixed cost measures. Semi- fixed costs were significant. Recall that they ranged from nearly $1.2 million for calendar and fiscal year (FY) 1984 to almost $2.2 million for FY 1988 (see Table 2).
Recall the cost function applying to the high-low and regression methods, which are provided in a variety of forms, depending on the texts you used in your previous math, economics, or accounting courses. Figure 3 is a brief outline of the high-low and regression methods.
Table 2
1984 1985 1986 1987 1988
Net Variable Revenues* 2,885,969 3,828,255 4,086,667 3,940,799 4,298,748
Semi-Fixed (S-F) Expenses:
Salaries 613,006 968,789 1,211,464 1,289,758 1,360,489
Vacation 600 26,705 19,468 19,059 18,268
Advertising & Training 210,226 288,347 281,219 309,608 371,314
Supplies/Tools/Laundry 31,473 46,141 75,468 65,935 81,252
Freight 5,719 5,987 6,528 5,731 4,663
Vehicle 22,913 23,718 23,664 20,370 19,483
Demonstrators 10,465 4,969 –1,513 4,192 707
Floor-Planning 278,531 301,113 276,201 156,129 305,044
Total S-F Expenses 1,172,933 1,665,769 1,892,499 1,870,782 2,161,220
Fixed Expenses:
Total Fixed Expenses 1,449,208 2,050,172 2,290,867 2,164,362 2,653,620
Operating Profit/(Loss)** 263,828 112,314 -96,699 -94,345 -516,092
New Retail Vehicles Sold 1,798 1,977 1,674 1,450 1,897
* Revenues less variable costs equal Net Variable Revenues (or Contribution Margin, in aggregate).
** Net Variable Revenue less Total S-F Expenses less Total Fixed Expenses equals Operating Profit/(Loss).
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Mo NRVS Salary Vacation Adv/Trng SplyTls/Lndry Freight Vehicles Demo’s Floor-Plan Total 1 197 $ 52,951 $ – $ 22,561 $ 1,118 $ 382 $ 2,052 $ 1,881 $ (78,173) $ 2,772 2 133 $ 47,054 $ – $ 19,040 $ 3,573 $ 409 $ 1,405 $ 695 $ 28,456 $100,632 3 132 $ 55,372 $ – $ 14,373 $ 1,388 $ 742 $ 1,380 $ 469 $ 34,423 $108,147 4 141 $ 46,114 $ – $ 15,022 $ 2,894 $ 675 $ 2,057 $ 125 $ 5,697 $ 72,584 5 182 $ 48,309 $ – $ 19,966 $ 1,896 $ 572 $ 1,603 $ 131 $ 34,599 $107,076 6 156 $ 49,643 $ – $ 12,019 $ 1,188 $ 407 $ 2,524 $ 1,229 $ 53,737 $120,747 7 196 $ 55,784 $ 300 $ 13,217 $ 3,912 $ 643 $ 2,348 $ 1,206 $ 5,507 $ 82,917 8 178 $ 47,957 $ – $ 17,303 $ 2,012 $ 605 $ 1,208 $ 436 $ 32,436 $101,957 9 159 $ 53,743 $ – $ 16,535 $ 2,717 $ 209 $ 2,400 $ 1,476 $ 28,950 $106,030
10 141 $ 53,109 $ – $ 23,821 $ 1,102 $ 184 $ 2,076 $ 1,168 $ 20,876 $102,336 11 152 $ 45,491 $ 300 $ 14,146 $ 2,630 $ 331 $ 1,677 $ 635 $ 45,278 $110,488 12 31 $ 57,479 $ – $ 22,223 $ 7,043 $ 560 $ 2,183 $ 1,014 $ 66,745 $157,247 13 280 $ 49,049 $ – $ 19,992 $ 1,999 $ 582 $ 1,927 $ (477) $ (30,104) $ 42,968 14 136 $ 46,698 $ 300 $ 20,251 $ 1,192 $ 603 $ 1,156 $ 1,839 $ 50,583 $122,622 15 174 $ 59,790 $ 200 $ 20,082 $ 1,336 $ 492 $ 1,898 $ 1,260 $ 18,803 $103,861 16 171 $ 80,773 $ 600 $ 26,716 $ 3,873 $ 559 $ 1,808 $ 510 $ 23,080 $137,919 17 167 $ 71,130 $ 9,212 $ 25,223 $ 5,560 $ 356 $ 1,816 $ 2,350 $ 18,774 $134,421 18 161 $ 82,490 $ 6,007 $ 21,106 $ 1,737 $ 439 $ 1,384 $ (288) $ 23,802 $136,677 19 173 $ 98,172 $ 500 $ 17,799 $ 1,847 $1,628 $ 1,962 $ 1,591 $ 33,848 $157,347 20 161 $ 90,685 $ 2,690 $ 28,038 $ 4,415 $ (12) $ 2,446 $ (3,308) $ 13,480 $138,434 21 167 $ 97,771 $ 600 $ 37,284 $ 2,827 $ 480 $ 2,296 $ 1,709 $ 22,965 $165,932 22 153 $ 87,129 $ 1,740 $ 24,236 $ 5,836 $ 79 $ 3,175 $ 798 $ 18,898 $141,891 23 201 $ 95,910 $ 2,074 $ 27,244 $ 3,387 $ 188 $ 1,287 $ (2,025) $ 38,699 $166,764 24 33 $109,192 $ 2,782 $ 20,376 $ 12,132 $ 593 $ 2,563 $ 1,010 $ 68,285 $216,933 25 227 $ 89,041 $ 1,880 $ 26,719 $ 4,383 $ 769 $ 2,205 $ 2,493 $ (44,140) $ 83,350 26 150 $ 92,165 $ 3,602 $ 14,727 $ 10,231 $ 593 $ 2,289 $ (2,051) $ 36,311 $157,867 27 142 $ 88,981 $ 744 $ 27,880 $ 7,734 $ 414 $ 1,891 $ 386 $ 19,865 $147,895 28 104 $ 95,898 $ 960 $ 21,872 $ (684) $ 425 $ 2,288 $ 178 $ 19,013 $139,950 29 121 $ 96,245 $ – $ 18,705 $ 8,329 $ 483 $ 2,223 $ (262) $ 16,228 $141,951 30 99 $106,364 $ – $ 23,835 $ 2,540 $ 417 $ 1,683 $ (1,356) $ 37,637 $171,120 31 150 $ 90,564 $ 1,950 $ 25,605 $ 5,862 $ 222 $ 1,586 $ 486 $ (1,121) $125,154 32 144 $ 98,418 $ 1,540 $ 17,763 $ 6,998 $ 49 $ 1,751 $ (1,924) $ 34,757 $159,352 33 154 $110,436 $ 2,693 $ 32,379 $ 8,131 $ 818 $ 2,082 $ 1,547 $ 26,419 $184,505 34 130 $102,042 $ 1,060 $ 19,324 $ 6,026 $1,015 $ 1,714 $ 132 $ 21,134 $152,447 35 202 $124,413 $ 3,519 $ 22,412 $ 9,120 $1,255 $ 2,173 $ (2,337) $ 18,578 $179,133 36 51 $116,897 $ 1,520 $ 29,998 $ 6,798 $ 68 $ 1,779 $ 1,195 $ 91,520 $249,775 37 148 $ 97,083 $ 1,080 $ 9,112 $ 6,627 $ 565 $ 1,324 $ 1,164 $ (73,753) $ 43,202 38 153 $104,727 $ 3,230 $ 38,616 $ 5,892 $ 369 $ 1,523 $ (1,839) $ 30,443 $182,961 39 83 $ 95,622 $ 953 $ 22,690 $ 3,450 $ (182) $ 2,087 $ 454 $ 17,725 $142,799 40 101 $ 96,438 $ 1,244 $ 14,703 $ 5,259 $ 709 $ 2,095 $ 868 $ 26,402 $147,718 41 140 $114,995 $ – $ 28,764 $ 2,294 $1,006 $ 1,304 $ (1,990) $ (3,789) $142,584 42 132 $105,337 $ 160 $ 27,253 $ 8,155 $ 521 $ 1,667 $ 1,869 $ 15,090 $160,052 43 112 $ 98,989 $ 2,480 $ 24,419 $ 1,621 $ 514 $ 1,040 $ 329 $ (945) $128,447 44 127 $124,352 $ 1,800 $ 26,011 $ 902 $ 917 $ 2,880 $ (1,897) $ 30,405 $185,370 45 139 $115,875 $ 1,417 $ 24,492 $ 5,158 $ (77) $ 1,281 $ 2,959 $ 14,781 $165,886 46 156 $113,035 $ 1,820 $ 31,158 $ 2,901 $ 450 $ 2,259 $ 417 $ 15,613 $167,653 47 126 $119,106 $ 3,338 $ 32,213 $ 14,426 $ 120 $ 1,394 $ (2,659) $ 40,968 $208,906 48 33 $104,199 $ 1,537 $ 30,177 $ 9,250 $ 819 $ 1,516 $ 4,517 $ 43,189 $195,204 49 209 $ 98,938 $ 1,866 $ 26,737 $ 1,694 $ 853 $ 1,657 $ 601 $ (20,127) $112,219 50 124 $108,606 $ 3,676 $ 31,084 $ 9,040 $ 498 $ 2,266 $ (284) $ 18,236 $173,122 51 131 $106,396 $ 1,197 $ 33,278 $ 2,099 $ 605 $ 1,952 $ 668 $ 15,176 $161,371 52 144 $106,778 $ 241 $ 32,657 $ 9,328 $ 483 $ 1,852 $ 1,409 $ 25,245 $177,993 53 93 $124,805 $ 500 $ 29,794 $ 4,268 $ 788 $ 1,704 $ (1,771) $ 6,493 $166,581 54 199 $110,153 $ 1,910 $ 38,431 $ 5,407 $ 529 $ 1,882 $ 453 $ 21,851 $180,616 55 170 $117,276 $ 800 $ 27,640 $ 9,305 $ (180) $ 977 $ 1,310 $ 7 $157,135 56 186 $112,055 $ 980 $ 28,657 $ 1,803 $ (242) $ 846 $ (2,844) $ 17,192 $158,447 57 200 $114,765 $ 1,695 $ 36,425 $ 8,839 $ 859 $ 2,856 $ 1,532 $ 14,864 $181,835 58 146 $128,007 $ 1,560 $ 27,720 $ 10,944 $ (492) $ 1,864 $ 1,400 $ 10,121 $181,124 59 222 $116,811 $ 2,249 $ 27,941 $ 5,775 $ 245 $ 1,141 $ (3,513) $ 7,946 $158,595 60 73 $115,899 $ 1,594 $ 30,950 $ 12,750 $ 717 $ 486 $ 1,746 $ 188,040 $352,182
Table 3
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Preparing Graphs The single cost driver and nonfinancial measure in Table 3 is new retail vehicles sold (NRVS or X in the above cost function). There are eight financial measures (salary; vacation; advertising and training; supplies, tools, and laundry; freight; vehicles; demonstrators; and floor-planning [also known in the auto- mobile retail industry as interest expense relating to new car inventory]), as well as a total (aggregate measure) provided for all eight financial measures (or the Y in the above cost function).
FIGURE 3—For the high-low method to work, the $H and #H and the $L and #L measures must be
from the same accounting period.
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Using NRVS, the only available cost-driver, use Excel to prepare nine separate scatter plots and cost function-based trend lines and nine separate line graphs for each of the financial measures provided in Table 3. See Figure 4 and Figure 5 for a examples of completed graphs for salaries.
Now examine, on a preliminary basis, the pattern or trend (or lack thereof) for each of the “X” (NRVS) and “Y” (financial measure) data pairs and consider the following questions:
• You’re observing these data pairs for a 60-month period (i.e., five years); are any annual or other seasonal patterns or trends immediately apparent?
• Do the slopes of the trend lines (i.e., variable costs) make sense?
FIGURE 4—A Scatterplot Graph for Motomart Salaries
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In the case of salaries (see Figures 4 and 5), there’s no appar- ent trend or pattern. It’s odd that salaries decrease as NRVS increases—in fact, this doesn’t make any sense. However, it’s consistent with the high-low results, which also didn’t make sense. But remember, since this data came from Motomart, the firm attempting to relocate, it’s real and from an actual litigation support engagement (not a textbook problem), so it won’t necessarily work out perfectly.
The cost equation in Table 4 shows fixed costs (FC) at $106,866.00 and variable costs to be used to “reduce” total costs (TC) by $110.10 per NRVS. Compare the salary figures and coefficients (in bold type) to Figure 4. Notice that if you extended the trend line in Figure 4, it would hit the y-axis intercept at $106,866.00 (the fixed cost). Also notice that the R-squared (R-sq) measure in Table 4 equals 4.1 percent.
FIGURE 5—A Line Graph for Motomart Salaries
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Your math and statistics courses probably reviewed the use of the t-statistic, overall F-statistic, and related p-values, as well as some of the other measures presented here. Our application is a very simple one, so we’ll focus on only the R-squared measure. The other measures are provided in this example only for completeness.
Because the high-low technique didn’t work, it makes sense that the regression technique wouldn’t work well, either. Therefore, the results for high-low and regression are consis- tent. The advantage of the regression technique is that it mathematically quantifies the level of the problem or diffi- culty with the data. In this case, one of simple regression, the R-squared measure tells the story. Still focusing on the salaries example in Figure 5, the R-squared measure tells us that only 4.1 percent of the total or mixed or semi-fixed cost is explained by NRVS. This means that that cost equation developed from this historical data isn’t helpful in predicting future costs, as nearly 96 percent of the cost behavior, through use of this equation, remains unexplained.
Table 4
SAlArY = $106,866.00 – $110.10 NrVS
Predictor Coefficient Std Deviation t-statistic p-value
Constant 106,866.00 10,793.00 9.90 0.000
NRVS 110.10 70.17 –1.57 0.122
s = 25300 r-sq = 4.1%
Analysis of Variance
SOurCE DF SS MS F-statistic p-value
Regression 1 261,795 261,795 0.10 0.754
Error 58 152,801,120 2,634,502
Total 59 153,062,912
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REQUIREMENTS The project requires five steps to be presented.
Step 1 – Provide comments on a 5 year Income Statement.
Step 2 – Discuss patterns in expense items.
Step 3 – Identify High/Low activity levels.
Step 4 – Compute cost equations.
Step 5 – Summarize your findings.
In one Word document, provide individual sections for each Step. This Word document along with the Excel file (described below) will be uploaded when you click on the Take Exam button on your Student Portal to submit your project (described under “Submitting Your Assignment” later in the instructions).
This Senior Capstone project highlights your knowledge and the skills you have developed over the course of your educa- tion. There is nothing “new” to be learned here.
The knowledge and skills required for this project include English Composition, Financial Accounting, Managerial Accounting, Business Statistics and the abilities to think crit- ically and to present your work in a professional manner.
If you are unsure or don’t understand something about the project, then go back to your previous subjects to review. For example, if you don’t remember how to use the High/Low Method, the revisit your Managerial Accounting to refresh your memory on how to use the High/Low Method
Remember, there is nothing “new” here. Everything about this project you should already know how to do.
Senior Capstone: Business44
On your Student Portal, under the Supplements section of the Senior Capstone subject is a downloadable Excel file titled “Exam 500896 – Motomart Excel Spreadsheet”.
• The Excel file provides a detailed example of what needs to be done for one of the expenses in order to fill out the figures required in Steps 3 & 4. You will include this Excel file as part of your project submission along with the Word document you create to present this project.
o There is a “60 Months” worksheet that has the 60 months of data already entered. There is also a “Sample” worksheet that an example of how to cal- culate the R-sq.
o There is a “PLOT – SALARY” worksheet that shows how the FC, VC and R-sq figures are calculated for Salary.
o There is also a “high&low” worksheet for help with the high/low method in Step 3.
o Complete and include the Excel spreadsheet. You will need to create new worksheets for each of the other expenses following the example to calculate the figures needed for Table 5.
Operating Profits and Semi-Fixed Expenses
Step 1
First, using Tables 2–4, note the pattern of operating profits (or losses) over the five-year period. Then focus only on the semi-fixed expenses contained in Table 2. Do any amounts appear to be odd? (Think about whether the figures are right or wrong. What is it about the individual numbers that is not “right”?) Next, briefly comment on the five-year pattern or trend for operating profit/loss measures. You should be able to respond to this step in a few well-written sentences.
Senior Capstone: Business 45
Step 2 Focus only on the detailed semi-fixed expense contained in Table 3. Are there any unusual or odd patterns you might note in this detailed financial data? There are 5 expenses that have an oddity about them which doesn’t make sense. Similar to Step 1, what is it about the individual numbers that is not “right”? There are 4 expenses that “stick out” as not being cor- rect and one that has an unusual pattern. attention. You should be able to respond to this requirement in a few well- written sentences. Briefly comment on only the most obvious or apparent measures or patterns, by expense item.
Step 3 Identify the high and low measures in each column, just as you would in preparation for application of the high-low method or technique. For example, in Table 3 the high measure for the cost driver (NRVS) is 280 NRVS in month 13 and the low measure is 31 NRVS in month 12. Repeat this process for each of the eight separate semi-fixed expense columns and also for the total expense column. Insert a table for Step 3 to present your findings. The table should have three columns;
1. Expense
2. High Figure
3. Low Figure
After the high and low measures have been identified in each column, try to match each expense column’s high and low measure, separately, to the highs and lows identified in the NRVS column. They won’t match. Don’t try to correct the data, but comment on the potential for application of the high-low technique. What happens when the high and low activity level doesn’t match the high and low expense measure? Does this prevent you from correctly applying the high-low technique?
Don’t overanalyze this data, because there’s a problem with it and you don’t have sufficient information to correct it. Merely summarize your observations and unsuccessful attempts to match the high and low NRVS months (identified above), separately, with each of the high and low expense measure months. You should be able to do this in a very few well- written sentences.
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Step 4
Using the Excel file “Exam 500896 – Motomart Excel Spreadsheet” as per the instructions found above under the “Project Requirements”, reproduce and complete the following Table 5 and answer the four questions. The Excel file pro- vides an example of how to arrive at the figures that need to be entered into the Table. You will create new worksheets for each of the remaining expenses. Do the work to arrive at the figures for each expense. Be sure to include the Excel file as part of your submission to “backup” the data presented in the Table in the Word document being submitted.
The Excel spread sheet, while it will be included in your sub- mission for the project, will not be graded. It is supporting documentation for what is being presented in the Word docu- ment. Only the information that is in the Word document will be graded.
The FC and VC should be rounded to the nearest dollar. The R-sq is a percentage figure carried out to 2 decimal places.
Table 5
Column Expense FC VC r-sq
1 Salaries $106,866 –$110 4.10%
2 Vacation
3 Advertising and training
4 Supplies/tools/laundry
5 Freight
6 Vehicles
7 Demonstrators
8 Floor planning
Computed total
9 Total
Senior Capstone: Business 47
Complete the cost equations for the table. Use the R-squared as the single measure of “goodness of fit.” Don’t attempt to improve your results with the elimination of “outliers” or “influential outliers.” As you complete Table 5, answer the following questions:
1. What problems did you encounter?
2. Are the R-squared measures high or low?
3. Are the slopes negative or positive?
4. Are your conclusions consistent with those from the high-low effort?
Step 5
Summarize your findings by answering the following questions:
1. Can the Motomart data be used to prepare a reliable financial forecast? Why or why not?
2. If Motomart is included in the very large database used to prepare the financial forecast that supports the reloca- tion of Motomart closer to Existing Dealer, what concerns might present themselves with respect to the remainder of the database used for this forecast?
3. Would you rely on this forecast?
Writing Guidelines Refer to the “Submitting Your Work” section at the end of this book for details on submission requirements for the Motomart Case assignment.
Grading Criteria Your assignment will be evaluated according to the following criteria:
Content 80 percent
Written Communication 10 percent
Format 10 percent
Senior Capstone: Business48
Criteria Grade
Content 80 pts
• Step 1 – Provides comments on 5 year income statement
(worth 10 points)
• Step 2 – Discuss patterns in expense items (worth 10 points)
• Step 3 – Identify high and low activity levels (worth 10 points)
• Step 4 – Compute cost equations (worth 30 points)
• Step 5 – Summarize your findings (worth 20 points)
Written Communication 10 pts
• Answers each question in complete sentences leading to well-struc-
tured responses to each Step listed above.
• Uses correct grammar, spelling, punctuation, and sentence structure
• Provides clear organization by using words like first, however, on the
other hand, and so on, consequently, since, next, and when
• Makes sure the paper contains no typographical errors
Format 10 pts
The paper is double-spaced, typed in font size 12. It includes the student’s
• Name and address
• Student number, Course title and number, and project number
Total Grade %
Senior Capstone: Business 49
Writing Guidelines 1. Type your submission, double-spaced, in a standard
print font, size 12. Use a standard document format with 1-inch margins. (Do not use any fancy or cursive fonts.)
2. Include the following information at the top of your paper:
a. Name and complete mailing address
b. Student number
c. Course title and number (Senior Capstone: Business, BUS 450)
d. Project number (see Format instructions)
e. Project title (Professional Development Activity, Case 1, etc.)
3. Read the assignments carefully and complete each one in the order given.
4. Be specific. Limit your submission to the questions asked and issues mentioned.
5. If you include quotes or ideas from textbooks or other sources, provide a reference page in either APA or MLA style. On this page, list books, Web sites, journals, or any other references used in preparing the paper.
6. Proofread your work carefully. Check for correct spelling, grammar, punctuation, and capitalization.
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SUBMITTING YOUR ASSIGNMENT You can submit your research assignment online, following this procedure:
1. On your computer, save a revised and corrected version of your project.
2. Go to http://www.pennfoster.edu and log in.
3. Go to Student Portal.
4. Click on Take Exam next to the lesson you’re working on.
5. Enter your e-mail address in the box provided. (Note: This information is required for online submission.)
6. Attach your file or files as follows:
a. Click on the Browse box.
b. Locate the file you wish to attach.
c. Double-click on the file.
d. Click on Upload File.
e. If you have more than one file to attach, repeat steps a–d.
7. Click on Submit Files.