Average unit contribution of multiple products can be weighted according to the percent of units sold. To explain: The reason for the weighted average margin approach is used in practice.

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Chapter 6, Problem 21Q

To determine

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 6, Problem 21Q

To determine

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 6, Problem 21Q

To determine

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 6, Problem 21Q

To determine

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 6, Problem 21Q

To determine

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

Answer 6

Chapter 6, Problem 21Q

To determine

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

Answer 7

Chapter 6, Problem 21Q

To determine

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

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Answer 11

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Average unit contribution of multiple products can be weighted according to the percent of units sold. To explain: The reason for the weighted average margin approach is used in practice.

Solution Summary: The author explains that the weighted average margin approach is commonly used in practice because the information present with managers about revenue and cost by product line is available in aggregated form.

Concept explainers

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Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.

Want to see the full answer?

Chapter 6 Solutions

Average unit contribution of multiple products can be weighted according to the percent of units sold. To explain: The reason for the weighted average margin approach is used in practice.

Solution Summary: The author explains that the weighted average margin approach is commonly used in practice because the information present with managers about revenue and cost by product line is available in aggregated form.

Concept explainers

Videos

Introduction: Average unit contribution of multiple products can be weighted according to the percent of units sold. To explain: The reason for the weighted average margin approach is used in practice.

Want to see the full answer?

Chapter 6 Solutions

Introduction:

Average unit contribution of multiple products can be weighted according to the percent of units sold.

To explain:

The reason for the weighted average margin approach is used in practice.