Motomart Case 2.

Refer to the two table sbelow and focus of semi-fixed expenses (costs). What is odd about the figures and their patterns. Think about whether the figures are right or wrong. What is it about the individual numbers that are not right?

Table 1

SElECTED HISTORICAl INCOME STATEMENT AND RELATED MEASURES

YEAR 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 (costs):

Salaries 613,006 968,789 1,211,464 1,289,758 1,360,489

Vacation. 600 26,705 19,468 19,059 18,268

Advertising 210,226 288,347 281,219 309,608 371,314

Supplies/Tools. 31,473 46,141 75,468 65,935 81,252

Freight 5,719 5,987 6,528 5,731 4,663

Vehicle 22,913 23,718 23,664 20,370 19,483

Demonstrators 10,465 4,969 1,513 4,192 707

Floor-Planning 278,531 301,113 276,201 156,129 305,044

Total S-F costs. 1,172,933 1,665,769 1,892,499 1,870,782 2,161,220

Fixed Cost:

Total Fixed cost 1,449,208 2,050,172 2,290,867 2,164,362 2,653,620

Operating Profit** 263,828 112,314 -96,699. -94,345 -516,092

New Retail cars 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

Mo NRVS Salary Vacation Adv/Trng SplyTls/Lndry Freight Vehicles Demo's Floor-Plan Total

Table 2

SEMI-FIIXED (MIXED) EXPENSES FOR THE 60-MONTH PERIOD (FY 1984 THrOuGH 1988)

Mo NRVS Salary Vacation Adv/Trng SplyTls/Lndry Freight Vehicles Demo's Floor-Plan Total

1 197 $52,951 $ - $ 22,561 $1,118 $382 $2,052 $1,881 $(78,173) $2,772

2 133 $ 47,054 $ - $ 19,040 $ 3,573 $ 409 $ 1,405 $ 695 $ 28,456 $100,632

3 132 $ 55,372 $ - $ 14,373 $ 1,388 $ 742 $ 1,380 $ 469 $ 34,423 $108,147

4 141 $ 46,114 $ - $ 15,022 $ 2,894 $ 675 $ 2,057 $ 125 $ 5,697 $ 72,584

5 182 $ 48,309 $ - $ 19,966 $ 1,896 $ 572 $ 1,603 $ 131 $ 34,599 $107,076

6 156 $ 49,643 $ - $ 12,019 $ 1,188 $ 407 $ 2,524 $ 1,229 $ 53,737 $120,747

7 196 $ 55,784 $ 300 $ 13,217 $ 3,912 $ 643 $ 2,348 $ 1,206 $ 5,507 $ 82,917

8 178 $ 47,957 $ - $ 17,303 $ 2,012 $ 605 $ 1,208 $ 436 $ 32,436 $101,957

9 159 $ 53,743 $ - $ 16,535 $ 2,717 $ 209 $ 2,400 $ 1,476 $ 28,950 $106,030

10 141 $ 53,109 $ - $ 23,821 $ 1,102 $ 184 $ 2,076 $ 1,168 $ 20,876 $102,336

11 152 $ 45,491 $ 300 $ 14,146 $ 2,630 $ 331 $ 1,677 $ 635 $ 45,278 $110,488

12 31 $ 57,479 $ - $ 22,223 $ 7,043 $ 560 $ 2,183 $ 1,014 $ 66,745 $157,247

13 280 $ 49,049 $ - $ 19,992 $ 1,999 $ 582 $ 1,927 $ (477) $ (30,104) $ 42,968

14 136 $ 46,698 $ 300 $ 20,251 $ 1,192 $ 603 $ 1,156 $ 1,839 $ 50,583 $122,622

15 174 $ 59,790 $ 200 $ 20,082 $ 1,336 $ 492 $ 1,898 $ 1,260 $ 18,803 $103,861

16 171 $ 80,773 $ 600 $ 26,716 $ 3,873 $ 559 $ 1,808 $ 510 $ 23,080 $137,919

17 167 $ 71,130 $ 9,212 $ 25,223 $ 5,560 $ 356 $ 1,816 $ 2,350 $ 18,774 $134,421

18 161 $ 82,490 $ 6,007 $ 21,106 $ 1,737 $ 439 $ 1,384 $ (288) $ 23,802 $136,677

19 173 $ 98,172 $ 500 $ 17,799 $ 1,847 $1,628 $ 1,962 $ 1,591 $ 33,848 $157,347

20 161 $ 90,685 $ 2,690 $ 28,038 $ 4,415 $ (12) $ 2,446 $ (3,308) $ 13,480 $138,434

21 167 $ 97,771 $ 600 $ 37,284 $ 2,827 $ 480 $ 2,296 $ 1,709 $ 22,965 $165,932

22 153 $ 87,129 $ 1,740 $ 24,236 $ 5,836 $ 79 $ 3,175 $ 798 $ 18,898 $141,891

23 201 $ 95,910 $ 2,074 $ 27,244 $ 3,387 $ 188 $ 1,287 $ (2,025) $ 38,699 $166,764

24 33 $109,192 $ 2,782 $ 20,376 $ 12,132 $ 593 $ 2,563 $ 1,010 $ 68,285 $216,933

25 227 $ 89,041 $ 1,880 $ 26,719 $ 4,383 $ 769 $ 2,205 $ 2,493 $ (44,140) $ 83,350

26 150 $ 92,165 $ 3,602 $ 14,727 $ 10,231 $ 593 $ 2,289 $ (2,051) $ 36,311 $157,867

27 142 $ 88,981 $ 744 $ 27,880 $ 7,734 $ 414 $ 1,891 $ 386 $ 19,865 $147,895

28 104 $ 95,898 $ 960 $ 21,872 $ (684) $ 425 $ 2,288 $ 178 $ 19,013 $139,950

29 121 $ 96,245 $ - $ 18,705 $ 8,329 $ 483 $ 2,223 $ (262) $ 16,228 $141,951

30 99 $106,364 $ - $ 23,835 $ 2,540 $ 417 $ 1,683 $ (1,356) $ 37,637 $171,120

31 150 $ 90,564 $ 1,950 $ 25,605 $ 5,862 $ 222 $ 1,586 $ 486 $ (1,121) $125,154

32 144 $ 98,418 $ 1,540 $ 17,763 $ 6,998 $ 49 $ 1,751 $ (1,924) $ 34,757 $159,352

33 154 $110,436 $ 2,693 $ 32,379 $ 8,131 $ 818 $ 2,082 $ 1,547 $ 26,419 $184,505

34 130 $102,042 $ 1,060 $ 19,324 $ 6,026 $1,015 $ 1,714 $ 132 $ 21,134 $152,447

35 202 $124,413 $ 3,519 $ 22,412 $ 9,120 $1,255 $ 2,173 $ (2,337) $ 18,578 $179,133

36 51 $116,897 $ 1,520 $ 29,998 $ 6,798 $ 68 $ 1,779 $ 1,195 $ 91,520 $249,775

37 148 $ 97,083 $ 1,080 $ 9,112 $ 6,627 $ 565 $ 1,324 $ 1,164 $ (73,753) $ 43,202

38 153 $104,727 $ 3,230 $ 38,616 $ 5,892 $ 369 $ 1,523 $ (1,839) $ 30,443 $182,961

39 83 $ 95,622 $ 953 $ 22,690 $ 3,450 $ (182) $ 2,087 $ 454 $ 17,725 $142,799

40 101 $ 96,438 $ 1,244 $ 14,703 $ 5,259 $ 709 $ 2,095 $ 868 $ 26,402 $147,718

41 140 $114,995 $ - $ 28,764 $ 2,294 $1,006 $ 1,304 $ (1,990) $ (3,789) $142,584

42 132 $105,337 $ 160 $ 27,253 $ 8,155 $ 521 $ 1,667 $ 1,869 $ 15,090 $160,052

43 112 $ 98,989 $ 2,480 $ 24,419 $ 1,621 $ 514 $ 1,040 $ 329 $ (945) $128,447

44 127 $124,352 $ 1,800 $ 26,011 $ 902 $ 917 $ 2,880 $ (1,897) $ 30,405 $185,370

45 139 $115,875 $ 1,417 $ 24,492 $ 5,158 $ (77) $ 1,281 $ 2,959 $ 14,781 $165,886

46 156 $113,035 $ 1,820 $ 31,158 $ 2,901 $ 450 $ 2,259 $ 417 $ 15,613 $167,653

47 126 $119,106 $ 3,338 $ 32,213 $ 14,426 $ 120 $ 1,394 $ (2,659) $ 40,968 $208,906

48 33 $104,199 $ 1,537 $ 30,177 $ 9,250 $ 819 $ 1,516 $ 4,517 $ 43,189 $195,204

49 209 $ 98,938 $ 1,866 $ 26,737 $ 1,694 $ 853 $ 1,657 $ 601 $ (20,127) $112,219

50 124 $108,606 $ 3,676 $ 31,084 $ 9,040 $ 498 $ 2,266 $ (284) $ 18,236 $173,122

51 131 $106,396 $ 1,197 $ 33,278 $ 2,099 $ 605 $ 1,952 $ 668 $ 15,176 $161,371

52 144 $106,778 $ 241 $ 32,657 $ 9,328 $ 483 $ 1,852 $ 1,409 $ 25,245 $177,993

53 93 $124,805 $ 500 $ 29,794 $ 4,268 $ 788 $ 1,704 $ (1,771) $ 6,493 $166,581

54 199 $110,153 $ 1,910 $ 38,431 $ 5,407 $ 529 $ 1,882 $ 453 $ 21,851 $180,616

55 170 $117,276 $ 800 $ 27,640 $ 9,305 $ (180) $ 977 $ 1,310 $ 7 $157,135

56 186 $112,055 $ 980 $ 28,657 $ 1,803 $ (242) $ 846 $ (2,844) $ 17,192 $158,447

57 200 $114,765 $ 1,695 $ 36,425 $ 8,839 $ 859 $ 2,856 $ 1,532 $ 14,864 $181,835

58 146 $128,007 $ 1,560 $ 27,720 $ 10,944 $ (492) $ 1,864 $ 1,400 $ 10,121 $181,124

59 222 $116,811 $ 2,249 $ 27,941 $ 5,775 $ 245 $ 1,141 $ (3,513) $ 7,946 $158,595

60 73 $115,899 $ 1,594 $ 30,950 $ 12,750 $ 717 $ 486 $ 1,746 $ 188,040 $352,182

NOTE: Figures in brackets are negative values