Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Five to six times a year, Kicker puts on tent sales in various cities throughout Oklahoma and the surrounding states. The tent sales are designed

Five to six times a year, Kicker puts on tent sales in various cities throughout Oklahoma and the surrounding states. The tent sales are designed to show Kicker customers new products, engender enthusiasm about those products, and sell soon to be out-of-date products at greatly reduced prices. Each tent sale lasts one day and requires parking lot space to set up the Kicker semitrailer; a couple of show cars; a disc jocky playing music; a tent to sell Kicker merchandise, distribute brochures, and so on.

Last year, the Austin, TX tent sale was held in a corner of the parking lot outside the city exhibition hall where the automotive show was in progress. Because most customers were interested more in the new model cars than in the refurbishment of their current cars, foot traffic was low. In addition, customers did not want to carry speakers and amplifiers all the back to where they had originally parked. Total direct costs for this text sale were$14, 300. Direct costs included gasoline and fuel for three pickup trucks and the semitrailer; wages and per diem for the five Kicker personnel who traveled to the show; rent on the parking lot space; and depreciation on the semitrailer, pickups, tent, tables (in tent), sound equipment; and the like. Revenue was $20,000. Cost of goods sold for the speakers was $7,000.

Conceptual Connection: explain how does the company account for the cost of the tent sales? What income statement items are affected by tent sales? What do you think Kicker might do to make it more profitable in the future? Why?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Wiley CIA Essentials Of Internal Auditing Part 1 Exam Review 2023

Authors: S. Rao Vallabhaneni

1st Edition

1119987148, 978-1119987147

More Books

Students also viewed these Accounting questions

Question

Understanding Groups

Answered: 1 week ago