|
Posted by John on May 28, 2007, 8:19 pm
Please log in for more thread options
> Need some help! Is this a MCI/Enron thing? Anyone know the right answer?
>
> Benson and Jencks is a manufacturing company that specializes in
writing
> instruments. The past year was a difficult one for the company, as it
sought
> to retain its share in a market in which the largest competitors were also
> rapid innovators. Benson and Jencks introduced a new product late in the
> year, even though testing was not complete. It was a pen designed with two
> cartridges: one supplying ink and the other correction fluid. A person
could
> then switch easily between writing and correcting errors. It was priced
> fairly high, and was never heavily advertised. Even so, the Correct-O-Pen,
> as the product was named, was an overwhelming success.
> The success of the product has Fern Donald, the manager of the New
> Products division, worried, however. She was concerned that quality
problems
> would begin occurring, since the longevity of the pen and stability of the
> correction fluid formulation had not been tested. She did not want sales
> personnel to get the bonuses that appeared to be indicated, since they
might
> aggressively promote a product that would fail in use. She preferred to
> complete testing of the pen first, so that more confidence could be placed
> in the results.
> Top management, however, declined the tests. Ms. Donald then
instructed
> you, the accountant, not to prorate payroll taxes or rent expense for the
> rest of the year, but to show them as current expenses in total. In this
> way, the new product would appear to be only slightly profitable.
>
> What alternatives would the accountant have in this situation?
> What alternative would be best?
>
>
> Lost in the sauce student
The situation is not an "Enron thing". Think about new product expenses,
amotizing costs against a revenue stream, future expenses, etc.
.
--
Posted via a free Usenet account from http://www.teranews.com
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap