I'm stuck on the first part of a project and need some assistance because it's been quite some time since I took the accounting classes. The question is:
Using Tables-2-4, note the pattern of operating profits (or losses) over the five-year period. Then focus only on the semi-fixed expenses contained in Table 2. Do any amounts appear odd?(Think about wheter the figures are right or wrong. What is it about the individual numbers that is not "right"?) Next, briefly comment on the five-year pattern or trend for operating profit/loss measures. You should be able to respond to this step in a few well-written sentences.
Table 2 SELECTED HISTORICAL INCOME STATEMENT AND RELATED MEASURES 1984 1985 1986 1987 1988 Net Variable Revenues* 2,885,969 3,828,255 4,086,667 3,940,799 4,298,748 Semi-Fixed (S-F) Expenses: Salaries 613,006 968,789 1,211,464 1,289,758 1,360,489 Vacation 500 26,705 19,468 19,059 18,268 Advertising & Training 210,226 288,347 281,219 309,608 371,314 Supplies/Tools/Laundry 31,473 46,141 75,468 65,935 81,252 Freight 5,719 5,987 5,528 5,731 4,663 Vehicle 22,913 23,718 23,664 20,370 19,483 Demonstrators 10,465 4,969 -1,513 1, 192 707 Floor-Planning 278,531 301,113 276,201 156,129 305,044 Total S-F Expenses 1,172,933 1,665,769 1,892,499 1,870,782 2,161,220 Fixed Expenses: Total Fixed Expenses 1,449,208 2,050,172 2,290,867 2,164,362 2,653,620 Operating Profit/(Loss)** 263,828 112,314 -96,699 -94,345 -516,092 New Retail Vehicles Sold 1,798 1,977 1,674 1,450 1,897 Notes: Revenues less variable costs equal Net Variable Revenues (or Contribution Margin, in aggregate). Net Variable Revenue less Total S-F Expenses less Total Fixed Expenses equals Operating Profit/(Loss). Table 3 provides five years of monthly data (N=60) for NRVS and the related semi-fixed or mixed cost measures. Semi- fixed costs were significant. Recall that they ranged from nearly $1.2 million for calendar and fiscal year (FY) 1984 to almost $2.2 million for FY 1988 (see Table 2). Recall the cost function applying to the high-low and regression methods, which are provided in a variety of forms, depending on the texts you used in your previous math, economics, or accounting courses. Figure 3 is a brief outline of the high-low and regression methods.The $H & #H and the $L & #L measures must "match" or be from the same month or accounting period for the high-low method to work properly. SH less SL equals VC H# less or SH SL VC #H + #L TC less FC equals VC or TC FC VC MC equals TC equals FC plus VC or MC E TC FC VC Y-AXIS MC or TC equals INTERCEPT plus SLOPE or Y-AXIS MC or TC = INTERCEPT SLOPE MC or TC equals plus bX or MC or TC bX FIGURE 3-For the high-low method to work, the $H and #H and the $L and #L measures must be from the same accounting period. Preparing Graphs The single cost driver and nonfinancial measure in Table 3 is new retail vehicles sold (NRVS or X in the above cost function). There are eight financial measures (salary; vacation; advertising and training; supplies, tools, and laundry; freight; vehicles; demonstrators; and floor-planning [also known in the auto- mobile retail industry as interest expense relating to new car inventory]), as well as a total (aggregate measure) provided for all eight financial measures (or the Y in the above cost function).Step1 First, using Tables 2-4? note the pattern of operating prots [or losses] over the veyear period. Then focus onlyr on the semixed expenses contained in Table 2. Do any amounts appear to he odd? [Think about whether the gures are right or wrong. What is it about the individual numbers that is not \"right\"?} Next, briey comment on the veyear pattern or trend for operating protfloas measures. You should be able to respond to this step in a few wellwritten sentenoes