Question $1$:

Steven started ZZ Tire Company $10$ years ago. The company started as an installer and seller of tires. The company has now expanded to the point where they now manufacture tires in China to supply the retail stores. They have retail sales of over $$10$ Million a year. Right now, the only accounting that takes place is regular bookkeeping for tax purposes. The company performs no managerial accounting.

Provide detail how and where you will tell Steven why he should implement managerial accounting, and explain to him what managerial accounting is$.$ Go through basic points explaining why it is important to implement managerial accounting.

Question $2$:

ZZ Tire Company opened a new location last year. Use the following information to figure out contribution margin and operating income for last year:

Tires sold: $15,000$

Retail Price per tire: $$75$ per tire

Cost per tire: $$18$ per tire

Installation expense per tire $($payroll$)$: $$9$ per tire

Utilities: $$2,000$ per month

Rent: $$3,500$ per month

Clerks and phone receptionist: $$2,500$ per month