+1 (909) 375-5650
4982 Parkway Street, Los Angeles, CA 90017
support@smartwritingservice.com
800-888
Get an Answer

Case study on jeans production

In 2013, Lisa Perry opened Lisa’s Jeans Company, a small store that sold designer jeans in a suburban mall. Perry worked 14 hours a day and controlled all aspects of the operation. The company was such a success that in 2014, Perry opened a second store in another mall. Because the new shop needed her attention, she hired a manager for the original store. During 2014, the new store was successful, but the original store’s performance did not match its performance in 2013. Concerned about this, Perry compared the two years’ results for the original store. Her analysis showed the following:

20142013
Net Sales

$325,000

$350,000

Cost of goods sold

225,000

225,000

Gross Margin

$100,000

$125,000

Operating Expenses

75,000

50,000

Income Before Income Taxes

$25,000

$75,000

Perry’s analysis also revealed that the cost and the selling price of the jeans were roughly the same in both years, as was the level of operating expenses, except for the new manager’s $25,000 salary. The amount of sales returns and allowances was insignificant in both years.

Studying the situation further, Perry discovered the following about the cost of goods sold.

20142013
Purchases

$200,000

$271,000

Total Purchases Allowances

15,000

20,000

Freight-in

19,000

27,000

Physical Inventory, end of year

32,000

53,000

1. Using Perry’s new information, compute the cost of goods sold for 2013 and 2014 and account for the difference in income before income taxes between 2013 and 2014.

2. Suggest at least two reasons for the discrepancy in the 2014 ending inventory. How might Perry improve the management of the original store?

Place your order now for a similar paper and have exceptional work written by our team of experts to guarantee you A Results

Why Choose US

6+ years experience on custom writing

80% Return Client

Urgent 2 Hrs Delivery

Your Privacy Guaranteed

Unlimited Free Revisions

 

Previous ArticleNext Article