Summary Prepare a memo as the CFO of the company Murphy Patriots Pla
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University Of Phoenix UoP
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Prepare a memo as the CFO of the company Murphy Patriots Players Association and Maxfield, the CEO of Murphy Patriots Baseball Company. The memo should be directed to the CEO and the Players Associations answering the two questions.Case study details:ANALYSIS AND RESEARCH CASE: ACCOUNTING INFORMATI...
prepare a memo as the cfo of the company murphy patriots players association and maxfield
the ceo of murphy patriots baseball company the memo should be directed to the ceo and the players associatio
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Prepare a memo as the CFO of the company Murphy Patriots Players Association and Maxfield, the CEO
of Murphy Patriots Baseball Company. The memo should be directed to the CEO and the Players
Associations answering the two questions.
Case study details:
ANALYSIS AND RESEARCH CASE: ACCOUNTING INFORMATION AND SALARY NEGOTIATIONS
Murphy Patriots Players Association and Maxfield, the CEO of Murphy Patriots Baseball
Company, ask your help in resolving a salary dispute. Maxfield presents the following income statement
to the player representatives.
Murphy Patriots Baseball Company Income Statement
Tickets revenues $2,000,000
Stadium expense $1,400,000
Ticket expense 25,000
Promotion 35,000
Player salaries 400,000
Staff salaries and miscellaneous 200,000 2,060,000
--------------
Net income (loss) $ (60,000)
==========
Mr. Maxfield argues that the Murphy Patriots really lose money and, until things turn around, a salary
increase is out of the question.
As a result of your inquiry, you discover that Murphy Patriots Baseball Company owns 91 percent of the
voting stock in Patriots stadium, Inc. This venue is specifically designed for baseball and is where the
Patriots play their entire home game schedule. However, Maxfield does not wish to consider the profits
of Patriots Stadium in the negotiations with the players. He claims that "the stadium is really a separate
business entity that was purchased separately from the team" and therefore does not concern players.
The patriots Stadium income statement appears as follows:
Patriots Stadium Income Statement
Stadium rent revenue $1,400,000
Concession revenue 800,000
Parking revenue 100,000 $2,300,000
-----------------
Cost of goods sold 250,000
Depreciation 80,000
Staff salaries and miscellaneous 150,000 480,000
--------------------------------
Net Income (loss) $1,820,000
===========
Required: 1) What advice would you provide the negotiating parties regarding the issue of considering
the Patriots Stadium income statement in their discussion? What authoritative literature could you cite
in supporting your advice?
2) What other pertinent information would you need to provide a specific recommendation regarding
players' salaries?
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