Ash Bus 630 Week 1 Dq 2 Kranbrack Corporation

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M.K. Gallant is president of Kranbrack Corporation, a company whose stock is traded on a national exchange.  In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company’s earnings would grow by 20% this year.  Unfortunately, sales have been less than expected for the year, and Gallant concluded with two weeks of the end of the fiscal year that it would impossible to ultimately report an increase in earning as large as predicted unless some drastic action was taken.  Accordingly, Gallant has ordered that wherever possible, expenditures should be postponed to the new year – including canceling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-the-year advertising and travel.  Additionally, Gallant ordered the company’s controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have substantial inventories of work in process and finished goods at the end of the year.  Comment on the following questions.  Respond to at least two of your fellow students’ postings.

    • Why would reclassifying period costs as product costs increase this period’s reported earnings?
    • Do you believe Gallant’s actions are ethical?  Why or why not?
Assgnt.    The questions in this exercise are based on Dell, Inc.  To answer the questions, you will need to download Dell’s 2005 Form 10-K. You do not need to print this document in order to answer the questions.

    • What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your...