Utilize critical thinking skills, together with ethical values, to evaluate accounting and financial information and formulate business decisions.Assignment | Custom Homework Help
| Program Learning Outcome (PLO) | |||||||
| Accounting | |||||||
| PLO: Utilize critical thinking skills, together with ethical values, to evaluate accounting | |||||||
| and financial information and formulate business decisions. | |||||||
| Jones Company is a producer of high quality, branded products. Its brand is a household name | |||||||
| synonymous with quality for over 25 years. Recently, a discount store began to compete in the | |||||||
| territory by offering low quality products at cheaper prices. While Jones believes its customers | |||||||
| value quality, Jones was reluctant to let the discounter gain a presence in the marketplace. | |||||||
| Jones reacted by significantly reducing the prices of its products to match those of its new | |||||||
| competitor and cut certain costs to minimize the effects on its profit. The results of this | |||||||
| strategy can be seen in the financial statements of Jones Company below. | |||||||
| 2014 | 2015 | 2016 | |||||
| Units | 9,950 | 10,500 | 10,800 | ||||
| Sales | 89,550 | 100% | 89,250 | 100% | 86,400 | 100% | |
| Gross Profit | 49,750 | 56% | 44,625 | 50% | 37,800 | 44% | |
| Advertising | 9,453 | 11% | 5,250 | 6% | 5,390 | 6% | |
| Product Development (1) | 13,925 | 16% | 10,500 | 12% | 5,410 | 6% | |
| Administration | 11,448 | 13% | 15,750 | 18% | 16,200 | 19% | |
| Net Income | 14,925 | 17% | 13,125 | 15% | 10,800 | 13% | |
| (1) Research, new | |||||||
| products, innovation | |||||||
Based on the limited financial and other information above, please answer the followingquestions:
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Utilize critical thinking skills, together with ethical values, to evaluate accounting and financial information and formulate business decisions.Assignment | Custom Homework Help
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- Do you agree with Jones product pricing strategy?
- Do the financial statements indicate the strategy was successful and why?
- Unit volume increased and certain operating expenses decreased over the period.Doyou agree these are positive developments and why?
- Which trends in the financial statements are most concerning in addition to the decrease in profit? Are the effects likely to be only temporary in nature?
- What competitive strategy would you recommend and why?
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