Hello, I have a mini-case assignment for my Managerial Accounting class that I need help with. We were provided with the Case Information, the questions (and hints), and an excel file with the exhibits. As stated in the case questions, you can ignore the "Required Questions" listed in the information file. Pay attention to the hints, as they are very helpful. Thank you in advance!

ENTERTAINMENTNOW.COM Schedule of Planned versus Actual Operating Result Revenue $ Plan 473,280,000 COGS $ 359,692,800 Gross Profit $ 113,587,200 Fullfillment Marketing Technology & content General & administative Depreciation/amortization $ $ $ $ $ 74,400,000 23,212,800 23,600,000 19,000,000 31,000,000 Loss from operations Net loss per item sold $ (57,625,600) $ (1.94) AINMENTNOW.COM ed versus Actual Operating Results $ Actual 475,980,000 $ 364,124,700 $ 111,855,300 $ $ $ $ $ 76,557,800 25,115,800 23,950,000 18,750,000 31,000,000 $ (63,518,300) $ (2.10) ENTERTAINMENTNOW.COM Schedule of Planned versus Actual Volumes and Prices Plan Volume Books Music DVD/Video Toys Electronics 9,000,000 12,000,000 7,980,000 600,000 180,000 Total 29,760,000 Plan Revenue per Unit $ $ $ $ $ 18.00 13.00 16.00 34.00 40.00 Actual Volume 10,000,000 11,000,000 8,300,000 750,000 210,000 30,260,000 M and Prices Actual Revenue per Unit $ $ $ $ $ 17.50 14.00 14.00 29.00 43.00 ENTERTAINMENTNOW.COM Analysis of Planned vs. Actual Operating Re Step 1 Step 2 Revenue $ Plan Volume Variance 473,280,000 Cost of goods sold Gross profit $ $ 359,692,800 113,587,200 Fulfillment Marketing Technology and Content General & Administrative Depreciaton & Amortization $ $ $ $ $ 74,400,000 23,212,800 23,600,000 19,000,000 31,000,000 Loss from operations Variance Net loss per item sold Variance per item sold $ (57,625,600) $ (1.94) Step 3 Mix Variance ENTERTAINMENTNOW.COM lysis of Planned vs. Actual Operating Results Step 4 Step 5 Step 6 Step 7 Price Variance COGS Variance Fulfillment Variance Marketing Variance Step 1 $ Actual 475,980,000 $ $ 364,124,700 111,855,300 $ $ $ $ 76,557,800 25,115,800 23,950,000 18,750,000 ### $ (63,518,300) $ (100,000) $ (2.10) $ 0.00 Name:_____________________________________ EntertainmentNow.com Case Questions (20 points total) The difficulty in this case stems from the fact that the revenue (and therefore cost of goods sold) has three different cost drivers (instead of the usual 2, price and quantity). Therefore, I propose that this case is significantly easier if you separate your study of the Revenue (and resulting COGS and GM) and the Expenses. Let's start with the Expenses: Requirement 1 (2 points): Complete the following table indicating the planning assumptions and cost formula for each expense: Hint: You will need to read the case information (especially the \"Annual Operating Budget\" section on page 2) to determine which costs are fixed/variable. No costs are mixed. Fixed or Variable? Fixed Cost per Year Variable cost per unit sold Cost Formula Fulfillment Marketing Technology & content General & administrative Depreciation /amortization Requirement 2 (2 points): Complete the following table, which requires computing the flexible budget, activity variance, and spending variance for each expense. Actual Quantity of units sold: Fulfillment $ Marketing $ Technology & content $ General & administrative $ Depreciation /amortization $ Total Expenses $ Now let's focus on Revenues: Spending Variance Flex 76,557,800 25,115,800 23,950,000 18,750,000 31,000,000 175,373,600 $ 172,852,800 Page 1 of 6 Activity Variance Planning $ $ $ $ 74,400,000 23,212,800 23,600,000 19,000,000 $ $ 31,000,000 171,212,800 Name:_____________________________________ Requirement 3 (2 points): In the problems from the textbook, Revenue is computed as Price X Quantity. The complication with revenue (or \"twist\") in this case is that because there is more than one type of product (books, music, DVD/video, toys & electronics), there are actually 3 variables that can create variances in revenues. To see this for yourself, complete the following table: Actual Volume Actual Sales Volume % Actual Revenue per Unit Actual Revenue per Category Plan Volume Plan Sales Volume % Plan Revenue per Unit Books 10,000,00 0 $ 17.50 9,000,000 $ 18.00 Music 11,000,00 0 $ 14.00 12,000,000 $ 13.00 DVD/Video 8,300,000 $ 14.00 7,980,000 $ 16.00 Toys 750,000 $ 29.00 600,000 $ 34.00 Electronics 210,000 $ 43.00 180,000 $ 40.00 Total 30,260,00 0 29,760,000 Page 2 of 6 Plan Revenue per Category Name:_____________________________________ Requirement 4 (2 points): This means we need two additional flexible budgets for revenue instead of just one like we normally do. Let's do each flexible budget separately. First, prepare a flexible budget for the actual volume of units sold but using the sales mix from the planning budget. Complete the following table: Flex Volume Plan Sales Volume % Plan Revenue per Unit Flex Revenue per Category Books Music DVD/Video Toys Electronics Total 30,260,000 Requirement 5 (2 points): Next, prepare a flexible budget for the actual volume of units sold but using the actual sales mix. The only way this will differ from the actual revenue is due to changes between actual price and planning price. Complete the following table: Actual Volume Actual Sales Volume % Plan Revenue per Unit Flex Revenue per Category Books Music DVD/Video Toys Electronics Total 30,260,000 Requirement 6 (5 points): We are now ready to put it all together. Complete the following table: Step 1 Step 2 Step 3 Step 4 Page 3 of 6 Step 5 Step 6 Step 7 Step 1 Name:_____________________________________ Plan Revenue Volume Variance Mix Variance Price Variance $ 473,280,000 COGS Variance Fulfillment Variance Marketing Variance Actual $ 475,980,000 Gross profit $ 359,692,800 $ 113,587,200 Fulfillment $ 74,400,000 $ 76,557,800 Marketing Technology and Content General & Administrative $ 23,212,800 $ 25,115,800 $ 23,600,000 $ 23,950,000 $ 19,000,000 $ 18,750,000 Depreciation & Amortization $ 31,000,000 $ 31,000,000 Cost of goods sold Loss from operations $ 364,124,700 $ 111,855,300 $ (57,625,600) $ (63,518,300) Variance Net loss per item sold $ (100,000) $ (1.94) $ (2.10) Variance per item sold $ 0.00 Hints: Step 2: Use the revenue from Requirement 4; use the planning COGS cost ratio of 76%; use all other expenses from the planning budget. Page 4 of 6 Name:_____________________________________ Step 3: Use the revenue from Requirement 5; use the planning COGS cost ratio of 76%; use all other expenses from the planning budget. Step 4: Use the actual revenue, planning COGS cost ratio of 76%; use all other expenses from the planning budget. Step 5 Use the actual COGS. Step 6: Change the planned Fulfillment expense to actual Fulfillment expense. Step 7: Change the planned Marketing expense to actual Marketing expense. Page 5 of 6 Name:_____________________________________ Requirement 7 (4 points): Supplemental extension questions Use your knowledge and analysis of the table prepared in Requirement 6 to answer the following questions: a. b. c. d. What was the actual average selling price per item? What was the actual fulfillment cost per unit? What was the actual marketing cost per unit? What was the actual COGS cost ratio? Requirement 8 (6 points): The most interesting thing about this case is that the company sold 500,000 more units than planned - yet incurred a larger loss than planned!! Prepare 5 key comments that Mark Dibbs may want to share with the senior management team in their next strategy meeting that explain how this could occur. Note that there is no right/wrong answers here but I am looking for answers that: (a) are clear, (b) apply insights from the budget data. As a thought exercise, you also may wish to attempt to fully reconcile planned profit to actual profit in your own words. Page 6 of 6