Quarterly Statements Net income for Standard Snowblower Corporation increased substantially in 2000 to

$950,000 from only $278,000 a year earlier. Standard’s income for each quarter in 2000 was $320,000, $80,000,

$150,000, and $400,000, respectively.

a. How can decision making be improved by examining a company’s quarterly financial statements?

b. Would you expect the quarterly earnings for Standard to be constant? What earnings pattern would you project for a company in this line of business? Explain.

c. Standard pays $8,000 rent each month on its main distribution center. Given the company’s pattern of operations during the year, how should the total rent expense for the year be allocated to quarters to provide the most useful income statement information for decision makers? Explain.

d. Should management be given large performance bonuses for the improvement in profit in 2000? What factors might have contributed to the improvement?