Heather Hastings
761 Golden Oak Circle, Crystal Lake, IL 60014
Student#: 53587431
Project #: 50089600
Senior Capstone, BUS 450
Case 2: Motomart
Heatherhastings0328@gmail.com
Step 1
When looking at tables 3-5, yes, some of the amounts do appear to be odd. Over the five-year period, the company’s operating profits had consistently declined. However, in 1987, the loss slightly decreased compared to the previous year’s decline. This event was followed by a sharp decline that was presented the following year. Additionally, the S-F expenses continued to increase each year, and both the trends in net variable revenues and total fixed expenses continued to increase, with the exception of the year 1987.
Step 2
When looking at Table 4, I observed …show more content…
Although the Motomart case is said to be based upon real data, I feel that it is inaccurate in providing useful information, as they used the NRV as the cost driver in the determination of both the variable and fixed figures of the S-F expenses. Additionally, both the high-low and regression methods failed to provide reasonable, and reliable, cost equations that would be essential in the decision-making process. If Motomart was included in a very large database, used to prepare the financial forecast that supports the relocation of Motomart closer to the existing dealer, I would not rely on the forecasted data. This is due to the fact that Motomart is essentially a “small fish in a big pond” and their data would be flawed when compared to a large scale of data. In my opinion, both the variable and fixed values need to be properly determined in order to construct any further data regarding the total S-F expenses. As some of the values of the financial data were negative, I suspect that Motomart may have been keeping poor financial records. However, the inaccurate records could have been the result of using the NVR as the base unit. Furthermore, when examining the graphs, I did not observe that any seasonal patterns
761 Golden Oak Circle, Crystal Lake, IL 60014
Student#: 53587431
Project #: 50089600
Senior Capstone, BUS 450
Case 2: Motomart
Heatherhastings0328@gmail.com
Step 1
When looking at tables 3-5, yes, some of the amounts do appear to be odd. Over the five-year period, the company’s operating profits had consistently declined. However, in 1987, the loss slightly decreased compared to the previous year’s decline. This event was followed by a sharp decline that was presented the following year. Additionally, the S-F expenses continued to increase each year, and both the trends in net variable revenues and total fixed expenses continued to increase, with the exception of the year 1987.
Step 2
When looking at Table 4, I observed …show more content…
Although the Motomart case is said to be based upon real data, I feel that it is inaccurate in providing useful information, as they used the NRV as the cost driver in the determination of both the variable and fixed figures of the S-F expenses. Additionally, both the high-low and regression methods failed to provide reasonable, and reliable, cost equations that would be essential in the decision-making process. If Motomart was included in a very large database, used to prepare the financial forecast that supports the relocation of Motomart closer to the existing dealer, I would not rely on the forecasted data. This is due to the fact that Motomart is essentially a “small fish in a big pond” and their data would be flawed when compared to a large scale of data. In my opinion, both the variable and fixed values need to be properly determined in order to construct any further data regarding the total S-F expenses. As some of the values of the financial data were negative, I suspect that Motomart may have been keeping poor financial records. However, the inaccurate records could have been the result of using the NVR as the base unit. Furthermore, when examining the graphs, I did not observe that any seasonal patterns