15 15 Chapter 18 Discussion Forum Use this forum to post your answer to the Chapter 18 Discussion TIF 18-3 - (text page 938). Answer all questions in your primary post. You must reply to two other students. Refer to the grading rubric for point scoring guidelines. Forum Guidance: This week the discussion forum requires that you complete and present financial ratios. You do not have to write a memo. Simply complete the ratios and provide the management recommendations in a normal primary post format. Be careful with this discussion forum. Earning full points will require two key elements. First, you must provide the required ratio calculations, you must show the formulas and the results. Second, you must create a thoughtful management recommendation. Management recommendations must be connected with the chapter material. Emotional or editorial responses that are not connected to the chapter will receive point deductions. Finally, this is one of those forums where simple agreement replies will be marked down. There will be numerous recommendations, you are expected to use the reply process to challenge a set of recommendations or add additional value and insight. TIF 18-3 Communication The controller of New Wave Sounds Inc. prepared the following product profitability report for management, using activity-based costing methods for allocating both the factory overhead and the marketing expenses. As such, the controller has confidence in the accuracy of this report. Wireless Theater Speakers $153 150,000 Wireless Headphones $900.000 810.000 $90.000 $1.2 CDS 720.000 $1.000.000 Cost of goods sold Gross profit Marketing expenses Income from operations $ 0.00 $220.000 In addition, the controller interviewed the vice president of marketing, who provided the following insight into the company's three products: The home theater speakers are an older product that is highly recognized in the marketplace. The wireless speakers are a new product that was just recently launched. The wireless headphones are a new technology that has no competition in the marketplace, and it is hoped that they will become an important future addition to the company's product portfolio. Initial indications are that the product is well received by customers. The controller believes that the manufacturing costs for all three products are in line with expectations. Based on the information provided: 1. Calculate the ratio of gross profit to sales and the ratio of income from operations to sales for each product 2. Write a brief (one page) memo using the product profitability report and the calculations in (1) to make recommendations to management with respect to strategies for the three products