Accounting Question

Topic 5 DQ 2

Mar 7-11, 2024Review Case 8.32 in your textbook. Using the questions provided as a guide, discuss your recommendation(s) regarding what the company should do about the conference. Support your recommendation(s) with calculations based on the data provided.To participate in follow-up discussion, ask questions and post comments regarding classmates’ posts, or respond to follow-up questions posted by the instructor.Please include proper citations in your discussion post. Points will be deducted if proper citations are not used.Submitted on:Mar 7, 2024, 4:07 AMVIEW DQ RESPONSEJCJulia CaddowMar 7, 2024, 4:20 PMUnreadIn case 8.32 in Managerial Accounting, Anna Hogue, senior project manager and Ethan Tang, staff consultant in charge of registration for Flagstone Consulting are planning the company’s first conference (Davis & Davis, 2020). Three weeks before the conference, Anna and Ethan run into an issue when they discover only 10 people have registered for the conference (Davis & Davis, 2020). While the marketing firm indicates that 75% of registrants are received a month before the conference, some contacts admitted that medical professionals wait until the last minute to register for conferences (Davis & Davis, 2020). Anna and Ethan only have three days before they must decide on whether or not they will cancel, reschedule, or keep the conference at the same time (Davis & Davis, 2020).Anna and Ethan have three alternatives to choose when making the decision regarding the conference—keep the conference for the scheduled day, reschedule the conference, or cancel the conference altogether. In order to decide on one of these alternatives, Anna and Ethan would need to create a pro forma income statement for each option. There are a couple of details Anna and Ethan would need to keep in mind while completing the calculations. First, we analyze the profit that will be earned if Anna and Ethan decide to proceed with the conference. Flagstone Consulting anticipated a response rate of between 2% – 4% so they prepared a budget for each of the percentages in this range. The net income for a 2% response rate is $26,800, the net income for a 3% response rate is $50,300 and the net income for a 4% response rate is $73,800 (Davis & Davis, 2020). If the conference can meet the desired return, there would be a great benefit to going through with the conference. However, with only 10 attendees at $695 per ticket, this would only generate $6,950 (Davis & Davis, 2020).Canceling that conference has several drawbacks which should be considered before this option is chosen including several nonrefundable expenses. Some of these nonrefundable expenses include a $1,000 deposit to Townsley speaker, $6,000 direct mail advertising which has already been paid for, and speaker travel expenses which have already been booked (Davis & Davis, 2020).Finally, rescheduling the conference would also incur nonrefundable travel expenses and fees for additional mailings to total $1,500 (Davis & Davis, 2020). Based on these numbers and the calculations, the recommendation would be to wait until Thursday, the last day to cancel or reschedule the conference before incurring an additional $10,000 charge from the inn hosting the conference (Davis & Davis, 2020).). If enrollment reaches 2%, it would be in their best interest, however, if they only have 10 attendees, they should cancel the conference and cut their losses on the expenses they have already incurred.Davis, C. E. & Davis, E. (2020). Managerial accounting. Wiley & Sons, Inc.REPLY