Reporting in Action — BTN 22-1
1. Apple revenues by product line
($ in millions)
September
28, 2013
September
29, 2012
September
24, 2011
Total revenues………..……..………………….…..$170,910 $156,508 $108,249
iPhone* (53%)…….……..………………..…….….. 90,583 82,949 57,373
Accessories (13%)…………………..…..…..……
* Revenue rounded up so product line total revenues sum to total revenues.
2. Apple can divide up the operating expenses into product line direct and
indirect expenses. Some of the direct expenses of a particular product
line might be cost of goods sold, the product line manager’s salary,
other product line workers’ salaries, product purchasing department
expense, any direct supplies, and other expenses that can be directly
3. Solution depends on the particular annual report information obtained.
Comparative Analysis — BTN 22-2
($ in millions)
1. Profit margin = Net income/Sales
2. Investment turnover = Investment center sales
Investment center average assets
3. Apple’s profit margin (21.7%) is nearly identical to Google’s (21.6%).
Therefore, for every dollar of sales, the two competitors yield roughly
Ethics Challenge — BTN 22-3
1. There is an ethical concern in this situation. Pincus is taking actions
he would not otherwise take. He believes that “minor compromises” in
his behavior do not significantly affect clients. However, the problem is
2. Given that Pincus is aware of his behavior, its potential consequences,
and the source of what’s behind his behavior (in this case the focus by
management on meeting the quarterly responsibility performance
budget), he can approach his superiors (at least one or two he trusts)
3. Super Security (the employer) is ultimately responsible for any action
taken by its employees, including Pincus. Management must establish
an ethical code of conduct to ensure that department managers do not
engage in unethical behaviors that compromise the security of its
Communicating in Practice — BTN 22-4
Sample solution
MEMORANDUM
TO: Name, Store Manager
FROM: Your Name, National Office Manager
SUBJECT: New Performance Reporting
DATE: Current Date
All current and future periods’ performance reports for all managers
include an allocation of home office expenses. These expenses will be
assigned as a percent of store sales.
Taking It to the Net — BTN 22-5
Instructor note: The objective of this assignment is for students to be exposed to the
different accounting and business applications with spreadsheets.
1. The tutorials identified and read by the students will vary. For example,
one tutorial is titled “Return on Investment and Return on Equity
2. Student responses regarding the usefulness of spreadsheets will
depend on the tutorials accessed. For example, the tutorial “Return on
Investment and Return on Equity Business Model” shows how a
Teamwork in Action — BTN 22-6
1. The student must make decisions about geographic area, type of
business segment, and reporting structure. The objective is to have
them think about the many different ways a business can set up
2. Having comparable responsibility accounting reports is necessary to
reliably compare performance within a company (and across different
companies). Differences in performance reports can substantially
reduce the ability of management to draw meaningful comparisons and
confusing—which can yield inappropriate inferences.
1. Departmental income statements can be prepared for each department
once expenses have been allocated to it. The expenses will include both
2. If the indirect expenses are a large portion of total expenses, a
departmental income statement might not be the best measure of each
department’s performance. While the department’s income or loss is
3. United By Blue could use ratings from customer satisfaction surveys,
the number of repeat customers, the percentage of orders returned, and
Hitting the Road — BTN 22-8
1. [Student answers will vary for part (1).] One suggested responsibility
accounting reporting framework is to have (1) concessions and (2)
2. One suggested proposal is
Expense Allocation Basis
Heat…………….…………....Square footage occupied
Global Decision — BTN 22-9
1. Net sales percentage growth [non-percents in millions₩]
Segment Net sales % change from 2012 to 2013
communications………………………….
31.2 %
2. Percentage growth in net sales is higher in the IT and mobile
3. The IT and mobile communications segment earned more operating
4. Samsung’s management can use this information to help establish
long-term goals and strategies and for resource allocation decisions.
An important factor in the valuation of any company is its ability to
decisions.