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Warranties The full price of the Warranties would Additional May increase
bundled warranty will be cover 100% of charges to cost of
(proposed recognized in the products customers that products.
method) revenue in the year of the our product
sale and subsequently No guarantee that less Customers
offset by the expected revenues will competitive. may be
cost of servicing the increase unhappy about
warranty during the three incrementally from forced
years of coverage the purchase of
additional warranty.
warranties
Revenues would
temporarily
increase during the
transition period but
not sustainable on
an ongoing basis.
Recommendation
Maintain accounting for warranties separately. The analysis above implies that the
change will only temporarily increase revenue with no real growth and may have other
negative consequences.
Reward Programs
Issue
Can we increase the companys revenues by replacing the current discount reward
program with the points-based reward program through Rewards Plus Inc.?
Analysis
Criteria
Alternatives Minimize effect on the Increase Minimize costs Minimize potential
financial statements revenue (Other issues) negative aspects
,Recommendation
I will be pleased to discuss this with you at your convenience.