Discussion: Tesla MotorsPrevious Next
Discussion: Tesla MotorsPrevious Next Tesla Motors is the “it” stock right now in the automotive industry. Tesla was a pioneer in offering cars that run 100% on electricity rather than gasoline, and
Discussion: Tesla MotorsPrevious Next
Tesla Motors is the “it” stock right now in the automotive industry. Tesla was a pioneer in offering cars that run 100% on electricity rather than gasoline, and it has also diversified into solar energy, purchasing the company SolarCity. Its stock price has risen high enough in recent years that it has surpassed automobile giant General Motors in market valuation.
However, not all analysts believe Tesla is a good investment at its current price. It sells less than a 100,000 cars per year, compared with General Motors which sells around 10 million cars a year. Unlike General Motors, Tesla has yet to earn a profit.
Here are some articles both pro and con about whether you should invest in Tesla. Take a look at these articles and also try to find some more recent articles on Tesla’s stock:
https://www.forbes.com/sites/johnwasik/2017/04/14/5-reasons-why-tesla-is-bubble-priced/#d0626b26c631
https://www.smarteranalyst.com/2017/03/16/5-reasons-excited-tesla-inc-tsla-stock/
Based on what you’ve read, do you think Tesla is worth its high valuation, or is it simply priced too high because it is considered new and trendy? Would you personally invest in Tesla, or would you prefer to invest in one of the more established auto companies such as GM or Ford?
Discussion: Tesla MotorsPrevious Next Tesla Motors is the “it” stock right now in the automotive industry. Tesla was a pioneer in offering cars that run 100% on electricity rather than gasoline, and
Module 1 – Case
ACCOUNTING COST SYSTEMS AND COST BEHAVIOR
Assignment Overview
Preparation of an Income Statement for The Serious Reader Company
The first case of this course provides an opportunity to prepare a segmented variable costing (contribution margin, behavioral) income statement and analyze the information. This is a very small company and the information may seem simplistic at first glance. Don’t forget that numbers and hands-on practice best illustrate many basic accounting concepts.
The Serious Reader Company is a small online retailer operating out of a garage apartment. The owner buys books at garage sales, thrift shops, library sales, and whenever an opportunity arises. The company classifies all books into five categories based on cost of acquisition and estimated sales price. See below for details about books purchased and sold during the last year (20XX).
| Price Categories | |||||
| Units Sold | 4,000 | 1,000 | 500 | 400 | 400 |
| Unites Purchased | 6,000 | 1,200 | 1,000 | 1,000 | 1,000 |
| Resale Price | $4.00 | $12.00 | $20.00 | $45.00 | $60.00 |
| Cost | $0.50 | $4.00 | $10.00 | $20.00 | $20.00 |
In addition to purchasing inventory (used books), the company incurs some operating expenses.
| Variable Operating Expenses | |
| Shipping per book | $1.50 |
| Common fixed expenses | |
| Internet-related costs | $10,000 |
| Travel, etc. | $4,000 |
| Advertising | $1,000 |
| Other overhead | $5,000 |
Case Assignment
Required:
Computations (use Excel)
- Prepare a segmented variable costing (behavioral) income statement for the company in good format.
- Prepare a second variable costing statement assuming 90% of all the books in each category purchased were actually sold.
- Prepare a third variable costing statement assuming that the price is increased by 50% for all five categories (use original sales information).
- The owner enjoys the used-book business. Any suggestions as how to turn this into a full-time business venture so the owner can quit his other job? Prepare another income statement to support your idea.
Memo (use Word)
Interpret the results from the computations and explain how the information is useful. Write a 4- or 5-paragraph memo to the owner of the business. Start with an introduction and end with a recommendation. Each of the four or five paragraphs should have a heading.
Short essay to comment on the questions below (use Word). Start with an introduction and end with a summary or conclusion. Use headings. Maximum length of two pages.
- Why do many organizations make the effort to prepare a different type of income statement for internal purposes?
- Variable costing is not just about preparing income statements. Provide at least three scenarios in which understanding how costs behave is useful.
Assignment Expectations
Each submission should include two files: (1) An Excel file; and (2) A Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.