1. Both Accrual and Cash Systems Used in Accounting are Inadequate for a Weekly Report on Marketing Performance Ted Mitchell

2. Accounting Systems 1) Monthly Accrual System Audience is the shareholder Seek to match costs and revenues over time Smooth out the profit picture 2) Weekly Cash Flow System Audience is the Cost accountant Records all cash flows

3. You as Marketing managers will find The classic monthly accrual-based Accounting Reports – Balance sheet (important for retained earnings) – Income statement To be inadequate for making profitable marketing decisions You will be wanting a weekly marketing performance report

4. Fixed CostMinimum Cost in Month 1 Maximum Cost in Month 1 Rent for Month $2,000 Utilities per month $500 Coffee Maker $3,000$6,000 Furniture$2,000$4,000 Total$7,500$12,500 You will spend between $7,500 and $12,500 in cash into the business in the first month Ignore the sunk costs that are accrued each month

5. Marketing Manager in Biz Cafe Need a Weekly Performance Statement That identifies the cost of the marketing decisions made in the week and the market’s immediate response to those weekly decisions

6. You will want to build a weekly marketing manager’s report On a spreadsheet constructed for the reporting of a weekly marketing performance It will include: Price, Demand, Revenues, Cost of Goods Sold, Gross Profit, Direct Marketing Expenses for the Week and Marketing Profit! Marketing is the amount of profit being contributed to the owners’ net income by the firm’s weekly marketing efforts

7. Marketing Performance Report for 100 hours of Operation in Week # Selling Price Tag, P$3.50 Quantity of Cups sold (Demand), Q2,000 Revenue, R = P x Q$7,000 Cost per cup, V$0.30 Cost of Goods Sold COGS = V x Q $600 Gross profit, G = R - COGS$6,400 Cost of Servers (21 x $10 x 10 hrs)$2,100 Cost of Advertising$1,400 Cost of Radio Spots$1,400$2,800 Marketing Profit, Z = G – (Cost of Servers + Adv +Spots) $1,500

8. Three very useable weekly reports Provide some information for the Weekly Marketing Report 1) The Dashboard Report Cost of Goods Sold, COGS Gross Profit, G 2) The Weekly Sales Receipts Report Demand (Quantity sold), Q Price Tag(s), P Revenue, R 3) The Decision Summary Servers and Cost of Advertising, Radio Spots and Cost of

9. Marketing Performance Report for 100 hours of Operation in Week # Selling Price Tag, P$3.50 Quantity of Cups sold (Demand), Q2,000 Revenue, R = P x Q$7,000 Cost per cup, V$0.30 Cost of Goods Sold COGS = V x Q $600 Gross profit, G = R - COGS$6,400 Cost of Servers (21 x $10 x 10 hrs)$2,100 Cost of Advertising$1,400 Cost of Radio Spots$1,400$2,800 Marketing Profit, Z = G – (Cost of Servers + Adv +Spots) $1,500 You have to calculate your own Marketing Profit, Z

10. Any Questions on? 1) Why are the cash system and the accrual systems inadequate for the marketing manager in Biz-Café 2) Why is in the Weekly Report on Marketing Performance?