Memo
Laurent Bailey
ACC 501
Module 1 Case
May 9, 2015
Mr. Dixit
To: Serious Reader Company
From: Laurent Bailey, Sr. Accountant
Date: May 4, 2015
Subject: Quarterly Review
Serious Reader Company,
I’ve attached our completed income statement to this email, but I also wanted to quickly discuss the outcome your results.
Overall Result
Over the past year you have sold 4300 books, which look great on the surface. However you have experienced a severe profit loss. From the data that I have gathered from you records, your category D and E books are not doing as well as the other categories of books. You had a total loss of $9000 from those two categories of books. Although your income statement is showing a higher number of book sales in Category D and E, it is costing you more to purchase the books vs selling them.
90 % Sold
The second page of your income statement shows results with a little manipulation. Using the same numbers from your original statement, I am able to show you what your income would look like if 90% of all you book were sold. As you can see you profit would increase tremendously. You’ll experience a $36,900 profit increase by just increasing the sales.
50% Markup
Lastly, the final page of your income statement shows what your profits would be if you did a 50% markup from you original sales prices. This is where you can maximize your profits. Based on your original numbers, you will clear $99900. If you mark up your prices, your D and E categories that were hindering you initially would have you soaring.
Recommendation
My recommendation for maximum profit would be to mark your prices up 50%. This would be your best bet if you would like to quit your other job and turn this into a full time business. However, you must note that you would have more time to travel so your travel expenses would definitely rise. Also take in consideration that your other fixed expenses will rise once you start
ACC 501
Module 1 Case
May 9, 2015
Mr. Dixit
To: Serious Reader Company
From: Laurent Bailey, Sr. Accountant
Date: May 4, 2015
Subject: Quarterly Review
Serious Reader Company,
I’ve attached our completed income statement to this email, but I also wanted to quickly discuss the outcome your results.
Overall Result
Over the past year you have sold 4300 books, which look great on the surface. However you have experienced a severe profit loss. From the data that I have gathered from you records, your category D and E books are not doing as well as the other categories of books. You had a total loss of $9000 from those two categories of books. Although your income statement is showing a higher number of book sales in Category D and E, it is costing you more to purchase the books vs selling them.
90 % Sold
The second page of your income statement shows results with a little manipulation. Using the same numbers from your original statement, I am able to show you what your income would look like if 90% of all you book were sold. As you can see you profit would increase tremendously. You’ll experience a $36,900 profit increase by just increasing the sales.
50% Markup
Lastly, the final page of your income statement shows what your profits would be if you did a 50% markup from you original sales prices. This is where you can maximize your profits. Based on your original numbers, you will clear $99900. If you mark up your prices, your D and E categories that were hindering you initially would have you soaring.
Recommendation
My recommendation for maximum profit would be to mark your prices up 50%. This would be your best bet if you would like to quit your other job and turn this into a full time business. However, you must note that you would have more time to travel so your travel expenses would definitely rise. Also take in consideration that your other fixed expenses will rise once you start