Electronic Arts, Inc., more commonly known as EA Sports, develops and markets games for Sony’s PlayStation 3 and Microsoft’s Xbox. Using either the company’s March 31, 2009, Form 10-K or its annual report, answer the following questions. Access the company’s website to obtain the Form 10-K or use the EDGAR system by following the instructions in Appendix A. An interactive version of the company’s annual report is available on its website.
Required
a. Read the “Overview” subsection of the “Business” section of the company’s 10-K or annual report. The business section is near the beginning of the documents. Based on this information, is EA Sports a service or a manufacturing business? Explain.
b. Based on your response to Requirement a, what types of inventory do you expect EA Sports to have? Review the information in Note (9) of the company’s financial statements. Does the company have any inventory? If so, what is (are) the type(s) and dollar amounts of any inventory that EA Sports has? Does the information in Note (9) lead you to rethink your answer to Requirement a?
c. What are some cost drivers EA Sports might use to allocate common costs to the various games it markets?