This case shows an open door for students to utilize adaptable planning to perform a difference examination on the working consequences of EntertainmentNow.com. In the first place, the organization's unique spending plan is flexed to represent changes in deals volume. At that point, real results are contrasted with the flexed spending plan and broke down for item blend, value, expense of merchandise sold, productivity, and different fluctuations. Likewise, the case obliges a basic figuring to focus the breakeven level of offers given the organization's present variable and settled expenses.
· Difference between Planned and Actual Statement
· Loss from operations
· Loss per Unit
· The New Budgeted Income Statement for 30,260,000 Units
· Loss on Operations
· Loss per unit
· Reconciliation of Planned Loss with the Actual Loss
· Change in Revenue
· Cost of goods sold
· Change in Cost per unit
· Changes in Fixed cost
· Technology and Content Expenses
· General and Administrative Expenses
· Changes in Variable costs
· Fullfilment Expenses
· Actual Loss
· Break Even Analysis
· Breakeven Units
1. Conceptually, what factors explain the difference between planned and actual results?
2. Prepare a flexible budget for EntertainmentNow.com for the past year, flexing solely on total actual units sold.
3. Quantify the impact on the net loss per item sold of each factor you noted in Question 1.
4. Assume that technology and content, general and administrative, and depreciation and amortization costs are fixed costs that total $73.7 million annually. Based on EntertainmentNow.com’s current sales revenue, cost of goods sold, fulfillment expenses, and marketing, what is the company’s break-even sales in units? Is this level of sales realistic? Why or why not?