Hello everyone, I have an Assignment for you today. This assignment must be DONE by Tuesday, August 11, 2020, no later than 10 pm. By the way, I need this assignment to be PLAGIARISM FREE & a Spell Check when completed. Make sure you READ the instructions CAREFULLY. Now without further ado, the instructions to the assignments are below:

Instructions

Cookie Creations (Chapters 9 and 10)

This assignment will focus on the Cookie Creations case study from Chapter 9 (page 9-37) and Chapter 10 (page 10-42) of your textbook. There are two parts to this assignment. Review the case situations for each part (i.e., in each chapter), and then complete the instructions.

Part I

One of Natalie’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Natalie’s fine European mixers, which would enable him to make larger batches of muffins and cookies. However, Curtis cannot afford to pay for the mixer for at least 30 days. He asks Natalie if she would be willing to sell him the mixer on credit.

Natalie comes to you for advice. She asks you to address the questions below.

1. Curtis has given me a set of his most recent financial statements. What calculations should I do with the data from these statements, and what questions should I ask him after I have analyzed the statements? How will this information help me decide if I should extend credit to Curtis?
2. Is there an alternative other than extending credit to Curtis for 30 days?
3. I am thinking seriously about being able to have my customers use credit cards. What are some of the advantages and disadvantages of letting my customers pay by credit card?

The following transactions occurred in June through August 2020.

June 1: After much thought, Natalie sells a mixer to Curtis on credit, terms n/30, for $1,150 (cost of mixer $620).

June 30:  Curtis calls Natalie. He is unable to pay the amount outstanding for another month, so he signs a 1-month, 8.35% note receivable.

July 31: Curtis calls Natalie. He indicates that he is unable to pay today but hopes to have a check for her at the end of the week. Natalie prepares the journal entry to record the dishonor of the note. She assumes she will be paid within a week.

Aug. 7: Natalie receives a check from Curtis in payment of his balance owed.

Instructions:

• Answer Natalie’s questions in a Word document.
• Prepare journal entries for the transactions that occurred in June, July, and August in an Excel spreadsheet. Round to the nearest dollar. Note that the company uses a perpetual inventory system. Use the Part I Excel Template (which will be attached below) to record your transactions.

To reiterate, you will write your responses to Natalie’s questions (1–3) in a Word document, and you will complete the journal transactions in an Excel spreadsheet. Your responses to Part I (Natalie’s questions) should be a minimum of one page in length, and you will add your responses for Part II to this document before submitting.

Part II

Natalie is also thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have a lot of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life, the van will sell for $7,500. Assume that she will buy the van on August 15, 2020, and it will be ready for use on September 1, 2020.

Natalie is concerned about the impact of the van’s cost on her income statement and balance sheet. She has come to you for advice on calculating the van’s depreciation.

Instructions:

1. Determine the cost of the van.
2. Prepare three depreciation tables for 2020, 2021, and 2022: one for straight-line depreciation (similar to the one in Illustration 10-9), one for double-declining balance depreciation (Illustration 10-13), and one for units-of-activity depreciation (Illustration 10-11). Use the Part II Excel Template (which be attached below) to determine depreciation. For units-of-activity, Natalie estimates that she will drive the van as follows: 15,000 miles in 2020; 45,000 miles in 2021; and 50,000 miles in 2022. Recall that Cookie Creations has a December 31 year-end.
3. What impact will the three methods of depreciation have on Natalie’s balance sheet at December 31, 2020? What impact will the three methods have on Natalie’s income statement in 2020?
4. What impact will the three methods of depreciation have on Natalie’s income statement over the van’s total 5-year useful life?
5. What method of depreciation would you recommend Natalie use, and why?

Use the same Word document that you used to record your Part I responses (one page in length), and add your responses for the Part II questions (1–5), which should be one page in length.

In summary, you will submit one Word document containing your responses for Parts I and II (two-page minimum) and two Excel spreadsheets containing Natalie’s journal transactions from Part I and the depreciation tables from Part II. You will upload a total of three files to Blackboard (one Word document and two Excel spreadsheets).

There are no resources required for this assignment; however, your Word document should be formatted using APA Style.

There are several attachments below first four are screen shot from the text book and basic examples of how to calculation Methods (from Chapter 9 & 10). The next attachment is the Excel Template for part one of the assignment that must complete. Then Study Guide will be the next attachment. Following the study will be the second template for part 2 of the assignment. And remember the response for both part 1 & 2 of the assignment goes in one Word document (Two pages minimum in total for both responses – APA style). Complete both complete both templates in there own separate documents. NO PLAGIARISM NO PLAGIARISM!!!!!!

 

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R EV : J U NE 5 , 201 9

 

 

 

A NI T A ELBER S E

 

The Walt Disney Studios

 

Amid cheers from thousands of fans, many of whom had camped out for weeks to be a part of the experience, Hollywood’s biggest stars and most powerful executives were arriving for what was billed as the entertainment event of the year—the world premiere of Star Wars: The Force Awakens. It was the early evening of December 14, 2015. Among those walking the red carpet—stretching out over four blocks of Hollywood Boulevard, which had been closed off for the occasion—was Alan Horn, chairman of The Walt Disney Studios (‘Disney Studios’), the studio behind Lucasfilm’s new film. He greeted Bob Iger, chairman and chief executive officer of parent company The Walt Disney Company (see Exhibit 1), who had just posed for some impromptu photos with several ‘stormtroopers,’ white-armored characters made famous by the Star Wars franchise, that were lined up alongside the red carpet.

The two men and their families would soon make their way to the Dolby Theatre, one of three neighboring theaters that served as the venues for the premiere. Once there, Iger would call Horn, Lucasfilm president and producer Kathleen Kennedy, director J.J. Abrams, and the main cast and crew members onto the stage to celebrate the film’s first screening. The movie, made for more than $200 million, would open for audiences across most of the world on December 16, 2015—and Iger and Horn would finally begin to find out whether their investment in the Star Wars franchise reboot was going to pay off.

Star Wars: The Force Awakens was only the latest in a string of big bets that Horn had overseen since arriving at the studio in 2012. In fact, Disney was primed to pursue what Horn called a “tentpole strategy” that revolved around at least eight big movies each year. Some came from Disney Live Action (known for Pirates of the Caribbean) and Disney Animation (which had scored a mega hit in 2013 with Frozen). But just as many big productions came from three studios that after multi-billion-dollar acquisitions now also operated under the Disney umbrella: Pixar (known for hits such as Toy Story and Finding Nemo), Marvel Studios (with its many superhero properties), and Lucasfilm (which gave Disney the rights to future Star Wars movies). In 2016, Disney planned to release twelve films, including four that had production budgets of around $200 million—Alice Through the Looking Glass, Captain America: Civil War, Finding Dory, and Rogue One: A Star Wars Story—and another four with budgets of at least $150 million.

There were significant risks involved in Disney’s strategy. In a given year, Disney Studios produced nearly twice as many tentpole movies as any other major Hollywood film studio, but fewer movies overall than all but one of its rivals. Box-office failures could be extremely costly, especially because Disney—unlike its rivals—chose not to enlist the help of financing partners. “When they don’t work, I have to wear that,” said Horn. Also, finding the right balance between pursuing existing franchises and new original concepts was difficult but critical to the studio’s long-term health. “Hollywood is littered with franchises that once seemed very promising but lost their appeal just as quickly,” remarked Horn, as he looked out over a red carpet that was buzzing with excitement. Would Disney’s tentpole strategy pay off—in the short and long run?

 

 

Professor Anita Elberse prepared this case. Research associate Jennifer Schoppe provided valuable research assistance. The case was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School, and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

 

Copyright © 2016, 2019 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545- 7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

 

 

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The Film Industry

In 2015, the motion picture industry generated around $38 billion in theatrical revenues worldwide (see Exhibit 2 for film industry statistics).1 “In the U.S., box office grosses are essentially flat,” said Horn. “Domestic revenues have been between $9 billion and $11 billion annually for a decade, and are projected to remain in that range.” Nearly 70% of Americans were moviegoers, and the average moviegoer attended five to six movies per year. “But internationally, we are seeing strong growth,” Horn added. “China alone now has an annual box office of nearly $7 billion, with annual growth projected to be 20%.”

Film Studios

Films were produced and distributed by both ‘major’ and ‘independent’ studios. The six major studios, each owned by large entertainment conglomerates, were 20th Century Fox (a subsidiary of 21st Century Fox), Paramount Pictures (owned by Viacom), Sony Pictures (a division within Sony), Universal Pictures (owned by NBCUniversal), Warner Bros. Entertainment (a subsidiary of Time Warner)—and Disney Studios. Hundreds of independent studios, lacking access to the vast production and distribution resources that characterized the majors, also produced films. A select few smaller studios, such as Lionsgate Films, had evolved to become ‘mini-majors’ and made films that could rival the major studios’ output in their production values and audience appeal. Nevertheless, in 2015, the ‘mini-majors’ and ‘indies’ together accounted for 85% of the films produced, but only around 20% of the box office grosses (see Exhibit 3 for box-office data for selected films in 2014 and 2015).2 “In any given calendar year, upwards of 600 films are being released in the U.S. and Canada,” said Horn. “But you’ve never heard of 400 of them because a release could mean it appears in one theater, one city, for one week.”

Theatrical Exhibition and Other Forms of Distribution

Films were made available to consumers through a series of ‘release windows,’ the first typically being the domestic theatrical window in which audiences could see the film in movie theaters across America. The three largest U.S. theater chains, Regal Entertainment Group, AMC Entertainment, and Cinemark USA, together accounted for nearly 40% of the 43,000 movie screens in the country.3 “The studios negotiate with the exhibitors to determine when their films make their debut in theaters, how long they stay in, and how much each party takes from each box-office dollar that is generated,” said Dave Hollis, Disney Studios’ executive vice president of theatrical distribution.

Studios and exhibitors employed various models to determine how to split revenues, explained Hollis: “Sometimes, we get higher percentages in the early weeks of a movie’s run in the theater, and lower percentages in later weeks. In other instances, the share that we take and the share that the exhibitor takes changes each time box-office grosses exceed certain thresholds.” Hollis estimated that major studios typically kept more than half of box-office receipts in the domestic market. He added: “We negotiate two-to-four-year deals with individual theater chains, staggering when those deals start and end. We make sure they know our movie slate and why we have the expectations that we have. Each film also has a separate licensing agreement that states the conditions under which they can show the movie.”

Films were usually released theatrically in international markets around the same time. China, Brazil, and other Asian and Latin American countries had emerged strongly in recent years. “As the middle classes in those countries expand, movie-going is becoming a part of the culture, but most of those markets are still under-screened,” noted Hollis. Horn agreed that there was significant room for more growth: “They are building over 20 screens a day, but there are still only around 33,000 screens in China for 1.3 billion people.” He added: “In China, the government will not allow the release of more than 34 films each year that are not produced in partnership with or fully owned by a Chinese company. So they don’t care about a film like McFarland, USA —they want to see Marvel’s Captain America.” In international markets, 3D technology was important. “In a handful of markets, especially

 

 

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in Asia, a lot of our business is done in 3D,” said Hollis, “and from a story-telling perspective, it acts as a differentiator from what consumers can experience at home.”

After playing in theaters, films were typically released on at-home-viewing platforms, including television, DVD and Blu-ray, video on demand, online streaming, and online downloads. In 2014, consumers spent $17.8 billion across these platforms. DVD and Blu-ray sales accounted for $6.9 billion in revenues, down from a peak of $21 billion in 2004. Electronic sell-through (which included downloads on platforms such as Apple iTunes) and subscription streaming (on sites such as Netflix) reached $1.5 billion and $4 billion in revenues, respectively, in 2014.4 Consumer products such as toys and games could be another source of ancillary revenues—characters made popular by films were a key category of licensed merchandise sold worldwide.5

 

The Walt Disney Company

Led by chief executive officer Bob Iger, The Walt Disney Company was the world’s largest entertainment conglomerate, headquartered in Burbank, California. It employed 185,000 people across four business segments (also see Exhibit 1):

· Media networks covered cable and broadcast television networks (such as ABC, one of America’s major broadcast networks, and ESPN, the top-rated sports network), television production operations, radio networks, and radio and television stations.

· Parks and resorts included several theme parks that Disney owned and operated in the US,

such as the Walt Disney World Resort in Florida and the Disneyland Resort in California, and around the world in Hong Kong, Paris, Shanghai, and Tokyo, as well as Disney Cruise Line.

· Studio entertainment produced and acquired films and direct-to-video content (through

Disney Studios), musical recordings (through Disney Music Group), and live stage plays (through Disney Theatrical Group).

· Consumer products and interactive engaged with licensees, publishers and retailers to design,

develop, and market a variety of consumer products based on Disney’s characters and stories, and produced content for games, mobile devices, websites, and other interactive media platforms.

 

The Walt Disney Studios

Established as an animation studio in 1923 by Walt Disney—who created the iconic character Mickey Mouse—and his brother Roy, Disney Studios released the first ever full-length animated feature film, Snow White and the Seven Dwarfs, in 1937. It became the highest-grossing film at the time, and earned Walt Disney an Academy Honorary Award for “a significant screen innovation,” which “pioneered a great new entertainment field,” as the Academy of Motion Picture Arts and Sciences put it.6 “Everyone at Disney is proud to be a part of the heritage of Walt Disney,” said John Lasseter, the chief creative officer of Pixar and Disney Animation. “A lot of us do what we do for a living because of the way he entertained us.” In 1950, Disney Studios first ventured into live-action films.

By 2015, Disney Studios employed about 6,500 employees, and spent close to $2 billion producing films annually and hundreds of millions of dollars more distributing and marketing them (see Exhibit 4 for its output in 2014). The studio was led by industry veteran Alan Horn, until 2011 the president and chief operating officer at rival studio Warner Bros., who joined Disney in June 2012.

Horn oversaw five studio ‘labels’ that together made up Disney Studios. Two, The Walt Disney Studios Motion Pictures (‘Disney Live Action’) and Walt Disney Animation Studios (‘Disney Animation’), draw lineage from Walt Disney’s original studio and produced live-action and animated feature films, respectively. Three others were acquisitions made during Bob Iger’s tenure as chief executive officer of The Walt Disney Company: computer animation studio Pixar purchased for $7.4 billion in 2006; Marvel Entertainment, which had its roots in comic books, for $4 billion in 2009; and legendary filmmaker George Lucas’ Lucasfilm for $4.05 billion in 2012 (see Exhibit 5 for each label’s

 

 

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film output). “Bob Iger wasn’t afraid to bet heavily on great stories, great characters and great content producers,” said Lasseter. “When his tenure is over, people will point to Marvel, Pixar, and Lucasfilm as great acquisitions. Those three assets have everything to do with the creative content that powers this company.” Horn agreed: “What Bob has done required both vision and courage. I am very fortunate I get to work with these brands and develop movies with them. Collectively, those assets enable us to realize our tentpole strategy.”

Disney Live Action

Since the 1950s, Disney Live Action had produced countless hit films. Recent successes included the Pirates of the Caribbean films (of which there had been four to date), Tim Burton’s Alice in Wonderland, and most recently a live adaptation of Cinderella, as well as a range of smaller, critically acclaimed films such as Saving Mr. Banks (starring Tom Hanks as Walt Disney), Into the Woods (featuring Meryl Streep, who was nominated for an Academy Award for her role as The Witch), and McFarland, USA (starring Kevin Costner as a cross-country coach at a small-town Latino high school) (also see Exhibit 5a).

The Disney brand ruled out some films, explained Sean Bailey, president of Disney Live Action: “We speak to a family audience. We aren’t going to make horror films, and we aren’t going to make R- rated comedies.” He added: “There are many movies that I would love to make that could never be Disney films. They simply do not fit our strategy.” Horn agreed: “We have a covenant with the audience. We don’t allow sex, violence, or smoking in our movies. When you see the castle with our logo come up right before the movie starts, you may not know what you are going to see but you do know what you are not going to see.”

“One question we often ask ourselves, after noting that something can be a Disney movie, is whether it should be a Disney movie—whether it adds something,” said Bailey. “We are well aware that our brand gives us an advantage with consumers. Most movies that studios like Warner Bros. and Universal make could have very easily been made by another studio. But when you say, ‘Disney’s Beauty and the Beast,’ you know what you are going to get.” Disney Studios’ other labels had come to affect Disney Live Action’s output. “We will no longer consider a movie that has an alter ego with a cape. That is Marvel’s domain now. And we may have made science-fiction films in the past, but I doubt we would consider, say, a space opera now, as Lucasfilm is making Star Wars films and Marvel has Guardians of the Galaxy,” said Bailey. “We have to work together to effectively share resources.”

Pixar Animation Studios

The animation studio Pixar had a long history with Disney. A production partnership between the two companies led to Pixar’s first full-length animated movie, Toy Story, released in 1995. A film about toys coming alive when humans leave the room, it went on to earn three Academy Award nominations and became the highest-grossing movie of the year. In 1997, the companies amended their agreement, turning it into a ten-year, five-picture deal that specified that both parties would equally share the costs and profits from Pixar’s films—a significant improvement over the earlier deal, which gave Pixar only 10% to 15% of the profits. Each of the five pictures made during the partnership, A Bug’s Life in 1998, Monsters, Inc. in 2001, Finding Nemo in 2003, The Incredibles in 2004, and Cars in 2006, was a box-office success. Finding Nemo, which revolved around a clownfish named Marlin who, along with a blue tang named Dory, searches for his son Nemo in the waters off Sydney, Australia, was the biggest hit, earning nearly $940 million at the box office globally.

“We chose to pursue stories that lend themselves well to the state of the technology at any given time,” said Lasseter, who not only served as Pixar’s chief creative officer but also directed several movies. His long-time collaborator Ed Catmull, president of Walt Disney and Pixar Animation Studios, had pioneered much of the technology used in creating the animated films with 3D graphics that Pixar had become known for. Lasseter explained: “When we made Toy Story, computer rendering was still simplistic and resulted in graphics that looked plastic-like—toys were a perfect fit for that time. And we could only animate on flat surfaces, which matched the kids’ rooms where you find toys. We needed our technology to evolve before we could make A Bug’s Life, where the main characters are ants who

 

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