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Apollo Shoes: Payroll, Revenue, and Expenses

Essay by   •  May 18, 2015  •  Coursework  •  967 Words (4 Pages)  •  1,819 Views

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Apollo Shoes: Payroll, Revenue, and Expenses

Account

2006

2007

Sales

       $246,172,918

     $245,213,453

Sales Expense

           $4,497,583

       $13,600,221

Warranty Expense

 $1,100,281

         $1,158,128

Payroll Expense                        

$21,508,690

$20,917,941

Payroll Taxes

           $1,550,989

         $1,577,812

Cost of Goods

        $141,569,222

      $130,246,645

Freight Expenses

           $4,302,951

         $4,236,263

Category

Formula

2006

2007

Sales Expense

 Sales Expense / Sales

1.83%

5.55%

Warranty Expense

Warranty Expense / Sales

0.45%

0.47%

Payroll Taxes

Payroll Taxes / Payroll Expense

7.21%

7.54%

Cost of Goods

Cost of Goods / Sales

57.51%

53.12%

Freight Expense

Freight Expense /  Sales

1.75%

31.15%

Category

Conclusion

Sales Expense

Significantly more in 2007

Warranty Expense

Comparable in 2007 from 2006

Payroll Taxes

Comparable to previous years

Cost of Goods

Decrease significantly due to June 2007 Price Increase

Freight Expense

Comparable to previous years

There are a few fluctuations on the expenses subject to management discretion, but they appear to have adequate explanations.  The company chose to stop the Research and Development on the product line, Phoneshoe, for a cost-cutting measure, and because the current product lines were not wearing out fast enough.  The company has decided to change the R&D lab into a personal gym to corporate executives.  

Also, Advertising expenses should also decrease, as management has decided not to show a Superbowl ad this year.  This is partially because of the rising costs of these ads, as the airing of the 2007 Superbowl ad is close to $1,000,000.  The estimates for the increase in the ads is roughly 10% from last year.

The last item is the advance that was given to Mr. Lancaster.  The board chose to record this $1,000,000 loan as an “other” receivable, instead of an employee advance.  This loan was for personal legal expenses incurred by Mr. Lancaster related to his previous employment, and it was decided as a matter of good will, that similar options will be made available to other board members as the situation occurs.

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