Michael Jordan, former American professional basketball
player is deemed to be the greatest basketball player of all time as declared on the official
NBA website.
Jordan
joined the Bulls in 1984 as the third overall draft pick, and quickly emerged
as a league star, entertaining crowds with his prolific scoring while gaining a
reputation as one of the game's best defensive players. Jordan won his first
NBA championship with the Bulls in 1991, and followed that achievement with
titles in 1992 and 1993 but suddenly retired before 1993-94 NBA season to play
Minor League Baseball but returned to the Bulls in March 1995 and
led them to three more championships in 1996, 1997 and 1998, as well as a
then-record 72 regular-season wins in the 1995–96 NBA season. He played 15
seasons in the NBA, winning six championships with the Chicago Bulls earning
NBA Finals Most Valuable Player (MVP) Awards.
In
2014, Jordan became the first billionaire player in NBA history. With a net
worth of $2.1 billion, he is the fourth-richest African American and the
richest former professional athlete in the world.
His
leaping ability, demonstrated by performing slum dunks from the free throw
line in Slam Dunk contests, earned him the nicknames "Air Jordan"
and "His Airness".
In
1984, Michael Jordan signed an initial contract with Nike worth $500,000
annually and this helped transform Nike and led to an earning of over $1 billion for Michael
as he fuelled the success of
Nike’s Air Jordan sneakers becoming the biggest endorsement bargain in
sports.
Can
we imagine the costing system which may be applicable to keeping the records of
the sales of the Air Jordan sneakers?
Absorption costing OR
Marginal costing OR any other costing system?
Exercise:
The
following budgeted figures relate to a Nike factory that produces the Air Jordan sneakers.
Overheads
are absorbed on a budget production basis and inventory is valued on a FIFO
basis.
|
Month 1 |
Selling
price per pair of sneakers (£) |
160 |
Production
(units) |
6,000 |
Sales
(units) |
5,500 |
Direct
materials per unit (£) |
22 |
Direct
labour per unit (£) |
20 |
Other
variable production costs (£) |
126,000 |
Fixed
production costs (£) |
186,000 |
Marginal Cost/ Unit:
Direct
materials per unit (£) |
22 |
Direct
labour per unit (£) |
20 |
Other
variable production costs (£) |
21 |
Marginal
cost / unit |
63 |
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