...Superior Manufacturing Company Description Superior manufacturing company produces three kinds of industrial products (101,102 and 103) in its own dedicated factories. It uses a job costing system helping to evaluate and arrange the whole process of production, which is later replaced by a standard cost system in 2005. In the market of similar products, Superior faces seven competitors, one of which is the dominant company Samra, a price-‐maker to some extent. As shown in the figure, Superior suffered a loss during 2004. What is worse, a weakened industry and some other problems like price reduction are coming in the following years. Problems and issues In terms of management changes and other reasons, Superior suffered a big loss even during an optimistic business year. It is obvious situation didn’t change better in the next year. It...
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...Description: The Superior Manufacturing Company received a net loss income statement for a good business year (2004). SMC has only 3 products and lots of competitors with similar products. So, price cutting always need a reduction by all the competitors in this industry. The manufacturing strategy of SMC is based on the ‘dedicated factory’, which means each product has its own productive factory. And SMC has a simple cost system. This cost system has 2 categories of costs. First one refers to the costs can be tied directly to the manufacture of specific products. Second one refers to the indirect costs and other costs. Problem and issue: SMC uses a new standard cost system in 2005 which is used to value inventories, prepare budgets, and analyze performance. The manager thinks the product 103 should be dropped for its high cost which could not be cut down, and the product 102 has an increasing demand. Also, the managers want to make a price reduction. However, they find that the costs are too high to support the price reduction. Does the cost system of SMC work effectively? Firstly, we calculate the loss of drop of product 103. We use the data of 2004. If we drop 103, the operating loss would be 4933. Secondly, we calculate the reduction price of product 101. If price of product 101 = 24.5 Profit = 750000*[24.5*(1-1.08%)-10.48]-12.36*996859 = -2004450 If price of product 101 = 22.5 Profit = 1000000*[22.5*(1-1.08%)-10.48]-12.36*996859 = -544000 We can see when the...
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...Introduction Superior Manufacturing Company is a company that had a loss of $688,000 in 2004. Manufacturing products 101, 102, and 103, cost analysis shows that products 102, and 103 have been unprofitable. SMC is also a company that has many competitors with products that are very similar so raising prices would cause customers to search for alternatives. The dominant competitor, Samra Company has been the cost regulator in the market by setting prices to be matched by competition. The manufacturing process uses three horizontally integrated dedicated factories that do not typically operate at capacity. Superior Manufacturing Company also uses a standard value costing method that is based on past performance. Decision to keep Product 103 Continuing production vs. Stopping production assumptions * Continue to pay fixed costs, not sell machinery immediately, and cut power to the building * Immediately reduce all direct labour costs, and reduce indirect labour costs to 5% for administration involving the property Table 1 (In thousands $) | Continue Production | Stop Production | Rent | $ 1,882 | $ 1,882 | Property Taxes | $ 401 | $ 401 | Property Insurance | $ 534 | $ 534 | Compensation Insurance | $ 458 | $ 5.77 | Direct Labour | $ 6,879 | | Indirect Labour | $ 2,309 | $ 115.45 | Power | $ 302 | | Light and Heat | $ 106 | | Building Service | $ 75 | | Materials | $ 4,851 | | Supplies | $ 350 | | Repairs | $ 104 | | Total | $ 18,249...
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...Warning, this is a study guide, not a cheat sheet. 1. Prepare a statement showing the incremental cash flows for this project over an 8-year period. -Initial investment: The initial investment (I) is the sum of the investment in plant and equipment. I = $1,000,000 -Working Capital: The additional net investment in inventory and receivables is the working capital needed for the project: WC = $200,000 There is no additional info about the WC, so we can assume that it will not change over the project's life. Then Working Capital Change for each year Yi is: this is a study guide, not a cheat sheet. ChWCi = Previous Year WC - Current WC = 0 (for i=1 to 7) and ChWC0 = -$200,000 The working capital is recovered, this means that for the end of the year 8 it will be zero or: this is a study guide, not a cheat sheet. ChWC8 = $200,000 -Depreciation: For the first five years Yi (i = 1 to 5): Di = (Invest in plant and equipment)/5 = $1,000,000/5 = $200,000 For the years 6 to 8 the depreciation will be zero. this is a study guide, not a cheat sheet. -Revenues: For the first year the expected revenues will be: R1 = $950,000 For the years Yi (i=2 to 8): Ri = $1,500,000 -Expenses: Indirect incremental costs will be $80,000 all the eight years. For each year the direct costs will be 0.55*Ri. Then for each year Yi (i=1 to 8), the expenses (Ei) will be: this is a study guide, not a cheat sheet. Ei = $80,000 + 0.55*Ri...
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...Homework 5: Oracle Crystall Ball MIS 6543 Business Analytics Fall 2013 Arkansas State University Instructor: Dr. Ahmad Syamil Due date: 8:00 PM, Wednesday, December 11, 2013. Name your homework files using your name and location, and then put them on Blackboard>MIS6543> Course Tools>Journals>Digital drop box>Create Journal Entry>Write an appropriate title and message including whether you are an online or face-to-face student> Attach file. Inform me by email after you submit your file. Of course you can submit your homework earlier. If you are an ASU Jonesboro face-to-face student, you must also submit the complete hard copy of your work under my office door (BU 406) by the due time. Do not submit the hard copy of the answer to each problem oneby-one. You can get Oracle Crystal Ball simulation software for chapter 13 from http://www.oracle.com/crystalball/index.html or http://www.oracle.com/technetwork/middleware/crystalball/downloads/index.html ?ssSourceSiteId=ocomen If you never register on the Oracle website, Oracle will ask you to register before downloading Oracle Crystal Ball (CB). Furthermore, you can only use the CB trial version for 2 weeks. Therefore, you should start working on this assignment no sooner than 2 weeks before the day you plan to submit this assignment. Using an older version of CB is also acceptable. Use Google. If you use one version for 2 weeks, you may be able to install another version for another 2 weeks. Consequently, you can use CB for 4 weeks....
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...933 million through sales of 986,974 units of product 103 during the year 2004. However, rest of the cost associated with product 103 is fixed cost and Super Manufacturing Company will have to bear this fixed cost regardless of its decision to produce product 103 or not. Currently, product 103 incurs net loss of $2.209 million, and if Super Manufacturing Company decides not to produce product 103, then it will incur additional loss of $2.671 million through net contribution lost by product 103. However, if product 103 is dropped then it will increase the net loss of Super Manufacturing Company to $3.359 million. Hence, Waters’ decision to keep the product 103 and use its contributions to cover the fixed cost is a good decision. Q2.) Should Superior Manufacturing Company lower as of January 1, 2006 its price of product 101? What will be the new price of product 101? The fixed and variable cost structure of product 101 shows that 54% of its standard cost is fixed and 46% is variable. However, a decrease in product 101 sales units will result in lost contribution because the larger part of cost is fixed and Superior Manufacturing Company will have to bear the fixed cost regardless the number of units sold. Hence, lower the number of sales units, lesser will be the recovery of fixed cost, therefore, Superior Manufacturing Company is suggested to lower its price in order to increase number of sales units of product...
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...105-S16 REV: 12 AGOSTO, 2004 JAMES W. CULLITON DAVID F. HAWKINS JACON COHEN Superior Manufacturing Company En febrero de 2005, Herbert Waters fue nombrado director general por Paul Harvey, presidente de Superior Manufacturing Company. Waters, de 56 años de edad, poseía una amplia experiencia en la fabricación de productos similares a los de Superior. El nombramiento de Waters era consecuencia del problema planteado por la muerte de Richard Harvey, fundador y presidente de Superior hasta su fallecimiento al comienzo de 2004. Paul Harvey, de 34 años de edad, tenía solamente cuatro años de experiencia de trabajo en la compañía. Su padre proyectaba entrenarle durante un período de diez años, pero su prematura muerte le había impedido realizarlo. El joven Harvey se convirtió en presidente a la muerte de su padre, y había ejercido pleno control en la compañía hasta el momento en que Waters entró a formar parte de ella. Nueva dirección Paul Harvey sabía que a lo largo de 2004 había cometido varios errores y se daba cuenta de que había decaído la moral de la organización, al parecer debido a la falta de confianza en él. Cuando dispuso de la cuenta de pérdidas y ganancias de 2004 (véase Anexo 1), la pérdida de casi 688.000 dólares sufrida en un año de actividad económica general favorable, le convenció de que necesitaba ayuda. Consiguió captar a Waters, que estaba trabajando en una empresa competidora, ofreciéndole una participación de capital además del sueldo, sabiendo que...
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...POLITECNICO DI MILANO Master of Science in Management, Economics and Industrial Engineering [pic] Management Control Systems Prof. Paolo Maccarrone Second Assignment: Analysis Group Ferrario Andrea Rognoni Susanna Taiana Marco Trifonov Angel A.Y. 2007/2008 Q1.Based on the 2004 statement of profit and loss data (Exhibits 1 and 2), do you agree with Water’s decision to keep product 103? In order to support an opinion on the side we decided to analyze all the probable scenarios. If the company management decided that it is better to stop the production of product 103, they could do this in one of the following manners: 1. Stop production and any business related to product 103. 2. Stop production but outsource it to another company and continue the distribution. 3. Stop production and use the available production capacity in order to produce product 101 or 102. If the company management decided that it is better to continue the production of product 103, they could do this in one of the following manners: 1. Maintain the same volume of production. 2. Increase the volume of production. 3. Lower the volume of production. 4. Substitute 102 production capacity with 103 if the 103 facility has not sufficient capacity to exploit economies of scale Analysis of the P&L statement of 31 December 2004 If we have a look at the P&L statement for the 2004 it is obvious...
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...CONTENTS Analysis of the case 2 Q1) Do you agree with Walters decision to keep product 103? 3 Analysis of Profit and loss statement 4 Sensitivity analysis 6 Strategic scenarios 8 Q2) Should superior lower as of January 1, 2006 its prices of product 101? To what price? 10 Q3) why did Supreme improve profitability during the period of January 1 to June 30, 2005? 13 Analysis 14 Q4) why is it important that Superior has an effective cost system? 17 What is your overall appraisal of the company’s cost system and its use in report to management 18 List the strengths and weaknesses of the system and its related reports for the purpose management uses the system’s output 18 What recommendations, if any, would you make to waters regarding the company’s cost accounting system and its related reports? 19 Initial Analysis of Superior Manufacturing Company Case :- 1) After death of Richard Harvey (2004), founder and president of Superior Manufacturing Company (SMC), Paul Harvey took over. Paul Harvey had only 4 years of experience. Soon followed serious management problems because of some bad decisions made by Paul Harvey. The income statement of 2004 reflected net loss of $0.68million in a good business year. To solve this problem Herbert Waters was brought over as General Manager of SMC. 2) SMC manufactured 3 different products namely 101, 102, 103 and was among the top 8 companies in the industry. Samra Company was market leader and announced price annually and other...
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...DI MILANO Master of Science in Management, Economics and Industrial Engineering [pic] Management Control Systems Prof. Paolo Maccarrone Second Assignment: Superior Manufacturing Company Analysis Group Ferrario Andrea 709407 Rognoni Susanna 720851 Taiana Marco 672497 Trifonov Angel 720619 A.Y. 2007/2008 Contents Q1.Do you agree with Water’s decision to keep product 103? 3 Analysis of the P&L statement of 31 December 2004 3 Sensitivity analysis 5 Strategic scenarios 9 Q2. Should Superior lower as of January 1, 2006 its price of product 101? To what price? 11 Q3. Why did Superior improve profitability during the period January 1 to June 30, 2005? How useful was the data in exhibit 4 for the purpose of this analysis? 14 Revenues 15 Costs 15 Q4. Why is it important that Superior has an effective cost system? What is your overall appraisal of the company’s cost system … 19 Why is it important that Superior has an effective cost system? 19 What is your overall appraisal of the company’s cost system and its use in report to management? 19 List the strengths and weaknesses of the system...
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...In Class Quiz October 8, 2013 Question: What factor or factors explain real wage convergence between the old world and the new during the period roughly 1870-1914? Did everyone benefit equally from the process? Answer: Before talking about convergence, it useful to say something about the level of real wages in the old world and in the new. In the old world, wages were relatively low because there was an abundance of labour while in the new world there was a scarcity of labour so that real wages there were relatively high. The question then: what forces were operating during this period to push up the real wages in the old world and/or down in the new world (and to move land rents in the opposite direction)? As many of you said, there were essentially three: 1. Migration, the movement of young, able-bodied, unskilled, mostly male workers from the old world to the new, pushed up the real wage in the old world as the labour force shrank and caused it to decline in the new world as the labour force increased. O’Rourke and Williamson maintain that migration explains most of the convergence during this period – in fact, it over-explains it. 2. The second was commodity market integration, thanks to technological advances in transportation – steam ships, railroads, refrigeration – that substantially reduced the cost of moving goods between the old world and the new and increased the variety and type of goods that could be moved. As a result, natural resources and farm...
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...order for us to achieve the same goals and objectives per period. The company sets our quota periodically. At the end of the period, we discuss with our superior of what percentage we have achieved in a certain time. Aside from strategic congruence, Thoroughness is also present. We also follow the 4 dimensions in performance management. Employees are being evaluated at a certain period of time, once a year, including managers. Human resource will also evaluate our job descriptions as well as our responsibilities and duties. After being evaluated for a certain period of time, feedbacks are given to us regarding our performance for that period of time. 2. Two characteristics that are not present in our firm are the Identification of Effective and Ineffective performance and Reliability. There are some employees that are not working properly yet they are still receiving allowances and incentives. It is a combined effort of all employees disregard of what an employee has done to achieve monthly quota. We can also not secure in staying in the company even if you were trying so hard. Supervisor’s judgment in performance evaluation is not fair and not free of error. 3. The best characteristic that is present in our company is the strategic congruence. Our individual goal is aligned with the company’s goal. Our immediate superior always discusses to his...
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...accountability based on “work and interaction”, in accordance with explaining the consequences of treating the individual not as an instrumental. In my personal opinion, I agree with an individualizing form of accountability because the organization stands for making a profit. In order to sustain and maintain the organization, a company needs to have a good performance, which brings it a profit. The hierarchical accountability is most suitable for this goal because it concentrates on securing self, as one is driven by the standard of acceptance and recognition. On the other hand, I do give a certain respect to attempting a socializing form of accountability. This form may benefit the company, as it facilitates a shift in focus away from superior control and makes a subordinate accountant have face-to face accountability between people of relatively equal power. However, it will eventually become a double-edged sword because this form of accountability leads to direct encounters between others. When that occurs, it...
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...To show that the companies are now merged, one of the most common practices is to use “one company, one email”. That way everyone can see that the companies have merged. But we also need to know how many computers they are currently using as well as how many servers, both physical and virtual. This will allow us to assess the combined strength of their IT infrastructure. We also need to know what version of Windows Server they are using as well as what Exchange server that they are using, that will help us establish how we can migrate all the information to one server for the new company to access the combined information. This will also allow us to establish domain trust for both networks that way both companies can access and share information between all the users. We can use the Active Directory Migration Tool to help with the merger of information. The ADMT will allow us to migrate users, computers, and groups from one domain to another domain. Since we are using an Exchange Server we need the information for the other company so we can use the Inter-Organization Replication Tool to replicate all of the information between the exchange servers so they both have all of the information, emails and anything that has been sent. This will also allow the coordination of meetings, appointments, contacts and all public folders to share access. If one or more domain exist, as in a merger, you can combine the multiple domains into a hierarchical tree structure. If one company is using...
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...Company Vision: A globally recognized company and at the forefront of the hospitality and real estate industry in the country that offers consistent products and services in key business and leisure destinations. We will be known for our innovation, exemplary service to both external & internal customers, and superior financial performance. Company Mission: We are committed to deliver quality products and services to exceed our clients’ satisfaction. We constantly achieve to reward them with superior experience and value for their money. Brief Historyof the Company and its Businesses: The company J. King & Sons Trading was started in 1950’s by family patriarch Jesus King. Beginning with a textile store called the King’s Remnants up to the 1960’s. In 1972 it was incorporated to J. King & Sons Company, where it ventures into real estate development. To date, the company business has diversified into: * Real Estate Leasing * Drive-In Hotel Operations * Hotel Operations * Health and Leisure * Real Estate Development * Laundry Operations Real Estate Leasing: J. King & Sons Company Inc. began to venture into the leasing of warehouses and commercials and residential spaces in 1970’s. It is now leasing over 200 warehouses in key areas of Cebu, Manila and Davao. Drive-In Hotels: In the mid-1990’s the company began focusing on the idea of a per day rental basis for its apartments to boost its real estate leasing business...
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