Question Details

[answered] Mickelsburg Garden Equipment: Analyzing Sales Gross Margin


Mickelsburg Garden Equipment: Analyzing Sales Gross Margin

Answer all parts of these requirements on this page through page 7-21. It is more convenient to complete the assignment if you remove pages 7-19 and 7-21 now. For each requirement, include the command you used, where applicable, and the correct answer or exception(s) found.

Mickelsburg Garden Equipment sells farm equipment and parts directly to farmers and equipment repair companies in the Dakftas. The gross margin on equipment is relatively low compared to the margin on parts, but the costs of preparing the parts for delivery is costly, but not treated as a cost of goods sold.

During discussions with management during the audit for the year ended 12/31/14 you are informed that they are extremely pleased with the current year financial results. For the past several years? net income before tax has been approximately 6% of sales before taxes, but this year it is more than 8%. Management attributes the increase to two factors: a significant increase in sales volume without a corresponding increase in expenses and a favorable change in sales mix between sales of parts and equipment. They have determined through their own analysis that gross margins stayed about the same each month, with small variations, for both parts and equipment.

During brainstorming discussions among the audit partner and staff the partner suggests that you do some preliminary analysis before doing any detail testing to facilitate concentrating on areas with the highest risk of misstatement. She is especially concerned that the team is satisfied that the increase in net income is consistent with the explanation provided by management. You start by performing some preliminary analysis of the financial information, which is included below. Because the decrease in all other expenses as a percentage of sales seems reasonable, you decide that for now your analysis will be limited to sales and cost of sales.

(000s omitted)

??????????????????????????????????? ?Year Ended December 31, 2014 ?? Year Ended December 31, 2013

????????????????????? ???????????????? Equipment? Parts ????????????????????? Total ?????? Equipment Parts ????????????????????? Total

Sales

4,116

1,586

5,702

3,592

1,362

4,954

Cost of sales

3,537

773

4,310

3,139

666

3,758

Gross margin

579

813

1,392

453

696

1,195

All Other Expenses

933

893

Net Income Before Taxes

459

302

Complete the following requirements using ACL:

Q 1. Do any analysis you consider appropriate to determine if the explanation by management seems reasonable. To the extent practical your answer should include any changes caused by the increase in volume and product mix and any changes from other factors. Some of the analysis may be done without the use of ACL. For all commands or other analyses that you do, state what you did and what you found, including the effect of any change or misstatement on cost of goods sold or income. Attach any supporting analysis.

Answer:

Q 2. After you complete your analysis, identify additional testing that should be performed to determine if your concerns in Question 1 are misstatements. These tests may or may not include using ACL.

Answer:

 


Solution details:
STATUS
Answered
QUALITY
Approved
ANSWER RATING

This question was answered on: Sep 18, 2020

PRICE: $15

Solution~0001013830.zip (25.37 KB)

Buy this answer for only: $15

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy from our tutoring website www.aceyourhomework.com (Deadline assured. Flexible pricing. TurnItIn Report provided)

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Sep 18, 2020

EXPERT

Tutor

ANSWER RATING

GET INSTANT HELP/h4>

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN YOUR SET DEADLINE.

Order Now