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Application of Accounting Principle Reflective Paper Solution
Application of Accounting Principle Reflective Paper
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Application of Accounting Principle Reflective Paper
Read Case 11-3. Choose the best strategy and justify your decision based on appropriate accounting principles.
Submission Instructions:
Your initial post should be 200-300 words, formatted and cited in current APA style.
You should respond to at least two of your peers by extending, refuting/correcting, or adding additional nuance to their posts.
Classmate post 1
In order to establish which strategy is best, the profits generated under each one need to be computed. Profits are computed by a simple formula, in this case, Profit = Revenue – Variable Costs – Fixed costs. Firstly, revenue is calculated by multiplying anticipated sales price per unit by anticipated sales volume in units.
Secondly, variable costs, which are costs that change accordingly to the activity base, are computed (variable cost per unit x anticipated sales volume in units).
Thirdly, fixed costs, that are cost that remain the same whether the activity base changes, are to be estimated (production costs + anticipated advertising costs). Finally, profits for each strategy are determined given each set of data.
To sum up:
Profit = Revenue* – Variable Costs** – Fixed costs***
* Revenues = anticipated sales price per unit x anticipated sales volume in units
** Variable costs = variable cost per unit x anticipated sales volume in units
*** Fixed costs = production costs + anticipated advertising costs
The Do-Nothing strategy:
Profit = ($75 x $800,000) – ($45 x $800,000) – ($9,000,000 + $15,000,000)
Profit = $0
This indicates that 800,000 units is the break-even point for the new video game.
Dan Gillespie’s advice:
Profit = ($60 x $2,000,000) – ($45 x $2,000,000) – ($9,000,000 + $15,000,000)
Profit = $6,000,000
Haley Chipana’s strategy:
Profit = ($75 x 1,200,000) – ($45 x $1,200,000) – ($9,000,000 + $20,000,000)
Profit = $7,000,000
The “do-nothing” strategy would report neither income nor loss for Aquarius Games Inc. since 800,000 is the break-even point. Dan’s strategy of reducing the price would generate $6,000,000 in profits, and Haley’s would report $7,000,000. Therefore, the best strategy is Haley’s, due to the fact that it is the one reporting the highest profits, which consist in maintaining the price and increasing advertising costs.
REFERENCE
Warren, Carl (2018). Survey of Accounting. Chapter 11 Cost-volume-profit-analysis. Pages 460,462,469
Classmate post 2
Application of Accounting Principles
Haley Chipana and Dan Gillespie, managers at Aquarius Games, are facing a dilemma. After the completion of a new game, Haley and Dan are seeking ways to increase the profitability of the game in order to break even with its advertising and production costs.
Haley suggests increasing the advertising budget; Dan suggests that increasing the price is a better idea. It is important to note that profitability differs from profit. Profitability is relative and is a measure of efficiency while profit is an absolute and quantifiable measure, typically in a dollar amount (Horton, 2019).
Of the two options, Haley has a better strategy and a better overall understanding of the difference between profitability and profit, as well as accounting principles. For a new video game that will be entering the market, it would seem likely that dropping the price for greater visibility and awareness would be a good idea.
However, in this case, a greater spend on advertising drums up the same awareness through paid media and earned media without losing sales numbers because of the lower price of the product.
Based on accounting principles, Haley’s suggestion allows for financial statements to potentially reflect greater sales and greater revenue as its reporting will have had time for more advertisements to run. More advertisements can lead to greater awareness and more sales to be recorded on the financial statement.
Dan’s strategy is one that sacrifices actual profit to increase profitability. Lowering the cost of the game would ideally be smart, especially for price-sensitive customers, but the question is of increasing profitability rather than profit and sales.
For a new game that is looking to get attention and visibility in the market, more advertising is the way to go as it gets the product in front of more eyes. It also allows marketers to make changes and fix errors that are typical in newer video games. Haley’s strategy of increasing advertising spend is a better strategy.
Reference
Horton, M. (2019, March 31). The Difference Between Profitability and Profit. Retrieved April 13, 2020, from https://www.investopedia.com/ask/answers/012715/what-difference-between-profitability-and-profit.asp
Application of Accounting Principle Reflective Paper
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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