Investment required (remember to depreciate existing long-term assets at the 2008 amount and ignore the half year
Question:
Investment required (remember to depreciate existing long-term assets at the 2008 amount and ignore the half year rule for 2009 new depreciation – i.e. apply a full year value for depreciation). • $600,000 software, expected life 3 years, zero residual value. • $1,500,000 warehousing, expected life 10 years $500,000 residual value. • 30% additional inventory versus 2008 year-end amount, for the foreseeable future. Sales will increase by 30% versus 2008 and total gross margin in 2009 will be 50% (note – this will include deferred revenues from prior year and deferred revenue in 2009 will be equal to 2008). A/R and A/P will not change vs 2008 (online = immediate payments both ways). SG&A Expenses will increase by 10% versus 2008 in 2009.
KEY DATA FOR OPTION 2 - BOUTIQUE: Investment required (remember to depreciate existing long-term assets at the 2008 amount and ignore the half year rule for 2009 new depreciation – i.e. apply a full year value for depreciation). • $5,000,000 for new stores, expected life 10 years, $1,000,000 residual value. • 100% additional inventory versus 2008 year-end amount, for the foreseeable future. Sales will double versus 2008 and total gross margin in 2009 will remain at 30% (note – this will include deferred revenues from prior year and deferred revenue in 2009 will be equal to 2008). A/R and A/P double vs 2008 (double sales and same business model). SG&A Expenses will increase by 50% versus 2008 in 2009
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds