A New Sales Representative, Jiggs Lucero, Has Just Received His

question 73

Essay

A new sales representative, Jiggs Lucero, has just received his copy of the month-end financial reports. He is puzzled by the term "unearned revenue." He left the following e-mail message for you on the company's bulletin board system:
What is this??? Creative Accounting, or what??? Line item 12 on year-to-date financials shows over $25Gs in Unearned Revenue!!! Come on, guys! Either we earned it, or we didn't ... Right??! Is this how you guys lower our commissions? Reply to j.lucero@sbd
Required:
Write a response to send to Jiggs.

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Definitions:

Variable Expenses

Costs that change in proportion to the activity of a business, such as sales commissions or raw materials.

Net Operating Income

is the total profit of a company after operating expenses are subtracted from revenue but before deducting interest and taxes.

Break-Even Sales

The amount of sales revenue required to cover all fixed and variable costs, resulting in zero net income or loss.

Variable Expenses

Variable expenses fluctuate in direct proportion to changes in activity level or volume, such as sales or production quantities.