Scents for Less
MODULE 9 Self-test case
(100 Minutes)
Scents for Less Ltd.
Updated Sept 12, 2011 As a recently graduated CGA, you started your new position as controller for Scents for Less Ltd. (SFL) on August 1, 2011. It is now a week later and you are working on several specific tasks assigned to you by your employer. You are understandably eager to impress your new employer and are looking forward to your new responsibilities.
SFL produces generic colognes in relatively small quantities and sells them to local retailers primarily in its own city. These colognes mimic well known perfumes with a lighter note and are marketed as an affordable version of a higher priced designer perfume. In the current economic environment colognes are selling at a faster rate than perfumes, due to the lower price point, which appeals to cost conscious customers. Each batch of cologne takes about three months to produce from start to finish. SFL has a production system that allows six batches to be in progress at any one time, so it starts a new batch twice a month. Regular customers place orders and receive shipments every two weeks, so the timing of orders coincides approximately with the completion and bottling of each new batch. The finance and accounting department consists of you, and a part-time accounts receivable clerk who used to work full-time until a year ago. At that time his hours were reduced to half-time by mutual agreement between himself and your predecessor. The cutback was partly a cost-saving measure and partly because the receivables clerk was nearing retirement age and wanted more free time. However, there currently is quite a delay between the production of the monthly financial statements and the production of an aging analysis. In order to familiarize yourself with the company, you reviewed the most recent draft financial statements of SFL, which were prepared just a few weeks before you took on the position. (Partial financial statements are provided in Exhibit
(100 Minutes)
Scents for Less Ltd.
Updated Sept 12, 2011 As a recently graduated CGA, you started your new position as controller for Scents for Less Ltd. (SFL) on August 1, 2011. It is now a week later and you are working on several specific tasks assigned to you by your employer. You are understandably eager to impress your new employer and are looking forward to your new responsibilities.
SFL produces generic colognes in relatively small quantities and sells them to local retailers primarily in its own city. These colognes mimic well known perfumes with a lighter note and are marketed as an affordable version of a higher priced designer perfume. In the current economic environment colognes are selling at a faster rate than perfumes, due to the lower price point, which appeals to cost conscious customers. Each batch of cologne takes about three months to produce from start to finish. SFL has a production system that allows six batches to be in progress at any one time, so it starts a new batch twice a month. Regular customers place orders and receive shipments every two weeks, so the timing of orders coincides approximately with the completion and bottling of each new batch. The finance and accounting department consists of you, and a part-time accounts receivable clerk who used to work full-time until a year ago. At that time his hours were reduced to half-time by mutual agreement between himself and your predecessor. The cutback was partly a cost-saving measure and partly because the receivables clerk was nearing retirement age and wanted more free time. However, there currently is quite a delay between the production of the monthly financial statements and the production of an aging analysis. In order to familiarize yourself with the company, you reviewed the most recent draft financial statements of SFL, which were prepared just a few weeks before you took on the position. (Partial financial statements are provided in Exhibit