Below Are Several Independent Items Listed for Which the Outcome

question 63

Essay

Below are several independent items listed for which the outcome of events is unknown at year-end, December 31, 2015.
a. Maldova Company had a barge that leaked oil into the waters surrounding Alaska. The company's legal counsel believes that the outcome may be unfavorable but has not been able to estimate the costs of the possible loss.
b. It is alleged by Maldova Company that Argo Company has infringed on its trademark, during a recent advertising campaign. Maldova is suing Argo and its legal experts believe that the suit will result in an award of $750,000 in Maldova's favor.
c. Maldova offers 2-year warranties on the equipment it sells and believes that 5% of its equipment will require warranty repairs.
d. A $35 coupon, good for one year is offered by Maldova during December. At December 31, approximately 10% of the coupons have been redeemed and it is estimated that there will be a total redemption rate of 45%.
e. Maldova Company has been sued by the federal government for EPA violations. The company's legal counsel believes that there will be an unfavorable verdict and has made an estimate of the probable loss
REQUIRED:
1. Identify which of the items a through e should be recorded at year-end.
2. Identify which of the items a through e should not be recorded but should be disclosed in the year-end financial statements.
a. Maldova Company had a barge that leaked oil into the waters surrounding Alaska. The company's legal counsel believes that the outcome may be unfavorable but has not been able to estimate the costs of the possible loss.
b. It is alleged by Maldova Company that Argo Company has infringed on its trademark, during a recent advertising campaign. Maldova is suing Argo and its legal experts believe that the suit will result in an award of $750,000 in Maldova's favor.
c. Maldova offers 2-year warranties on the equipment it sells and believes that 5% of its equipment will require warranty repairs.
d. A $35 coupon, good for one year is offered by Maldova during December. At December 31, approximately 10% of the coupons have been redeemed and it is estimated that there will be a total redemption rate of 45%.
e. Maldova Company has been sued by the federal government for EPA violations. The company's legal counsel believes that there will be an unfavorable verdict and has made an estimate of the probable loss
REQUIRED:

Understand the importance of alignment between the targeting process and the organization's mission.

Grasp the key variables and tools used in market segmentation, especially in B2B contexts.

Identify the factors essential for the success of targeting a specific market segment.

Comprehend the process and strategies for selecting a target market.

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Definitions:

Product Costs

The costs directly associated with the production of goods, including direct labor, direct materials, and manufacturing overhead.

Inventoriable Costs

Costs that are initially recorded as inventory on the balance sheet and recognized as cost of goods sold only when the inventory is sold.

Conversion Cost

The combined costs of direct labor and manufacturing overhead, representing the expenses to convert raw materials into finished goods.

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor, not directly traceable to specific units produced.