Assignment 2: Final Project: Annie's on Broadway: Summer Quarter

The impact of June promotion on sales has inspired Annie to reduce her advertising expense by
planning better promotions for the pre-fall quarter. She plans to mark down all goods sold during
Labor Day week by 15 percent. In addition, she partners with a local college, which has a
Fashion Design program, and sponsors a fashion show. This "goodwill" event has created quite a
stir in the community. Annie plans to award one free "Fashion Makeover" valued at $2,500.00 to
a local Breast Cancer Support Group for a woman whom the support group selects as being most
in need of the free makeover. During late July, the fashion show costs her $1,600.00, and the
makeover is awarded in the second week of August. Annie finds a new vendor (Vendor Z) who
deals in the same clothing and accessory lines as her prior vendor (Vendor A). Vendor Z and
Annie make a deal to increase the cash discount for early payment of the invoice to 3 percent and
to ship directly from the factory. Therefore, all items from Vendor Z arrive with prepaid freight,
and she manages to decrease her COGS by 2 percent for a total of 35 percent COGS for summer
on net sales (NS) of $162,075.00. Annie has also laid-off her full-time employee and reduced the
sales meeting refreshments by 50 percent. Advertising expense for the quarter is reduced by 15
percent because of establishment of the promotions. All other expenses remain the same.
Task
This week, perform the following activities.
1. If Annie has actual markdowns of 12.25 percent storewide for Labor Day week and the
NS for that week is 20 percent of the NS for the entire quarter, calculate the markdown
dollars for that week.
2. Create a skeletal P&L statement for the summer quarter ending September 30, 2005.
3. Did Annie's on Broadway meet their NS projection for summer quarter? Compare the
earned NS% with the planned NS%is it greater or lesser, and by what percentage?
4. Did Annie's pricing strategy work for the summer quarter? Justify your response on the
basis of data shown on the skeletal P&L statement.
5. How has Annie's on Broadway utilized pricing strategy combined with promotions to
establish a more profit-oriented business and an enhanced community image? Explain.
6. Did Annie's business meet its planned reduction in OE%? Explain. Compare the actual
vs. projected OE$ performance of summer quarteris it greater or lesser, and by how
much?
Deliverable
Use the given template to document your responses and submit it to the W4: Assignment 2
Dropbox by Monday, September 16, 2013. You can use the Word or Excel template depending
on your comfortyou'll be graded on the calculations and not on the choice of template.

Grading Scale for Assignment Criteria:

Excellent Good Moderate

Needs
Improvement
5 Points 4.5
4
3.5
Excellent Good Moderate
Needs
Improvement
10 Points 8.5
8
6.5
Excellent Good Moderate
Needs
Improvement
15 Points 12.5
12
9.5
Excellent Good Moderate
Needs
Improvement
20 Points 16.5
16
12.5

Below
Standard
3
Below
Standard
6
Below
Standard
9
Below
Standard
12

Unacceptable
02 Points
Unacceptable
04 Points
Unacceptable
06 Points
Unacceptable
08 Points

Assignment 2 Grading Criteria

Content
Correctly calculated the markdown dollars for the Labor Day
week.
Correctly completed skeletal P&L statement for summer
quarter.
Identified whether Annie's on Broadway met its NS
projection for summer quarter.
Correctly calculated the earned and planned NS% variance.
Identified if Annie's pricing strategy worked for the summer
quarter and justified the response.
Explained how Annie's on Broadway utilized pricing strategy
combined with promotions.
Explained if Annie's business met its planned reduction in
OE%.
Correctly calculated the actual vs. projected OE$
performance of summer quarter.
Format
Used the given template to document responses and
submitted it to the W4: Assignment 2 Dropbox by Monday,
September 16, 2013. Used the provided Word or Excel
template.
Total:

Maximum
Points

20

20
15
15
15
15
10
10

5
125

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