Rocco Rapini, owner of Decorative Interiors Inc (DI), aged 47 years has suffered an unexpected heart attack on 8th July, 2006 and is advised by doctors to reduce stress significantly in daily routine. This has forced him to take an appropriate decision about his business. He is in a dilemma and not able to decide which course of action will be beneficial both for his business as well as his health. Keeping this in mind, he has hired the services of a management consultant to help him take a decision on how to proceed.
Keeping ourselves in his shoes, we have analyzed various alternatives based on the following data:-
a) Balance Sheet as on 31st December 2005.
b) Statement of earning for year ending 2005.
c) Population and housing
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Establishing new business connections will be very difficult as he will be new to that area. Being suburb area, there will not be enough opportunity for his wife to support him financially, if needed.
Continuing the business in the same showroom:
It is estimated that the cost of hiring a sales manager and part time installer to run his business from the current show room will be $90,000 per annum. Although, his sales figures will increase to the level of 2004, [How can you assume that? Morris was an exceptional person. The spurt in sales in 2004 was due to her.] the monitoring of hired personnel will also add to his stress. Moreover, his past experience with Mary Morris was not less than a nightmare for him. Being a perfectionist, he is not at ease with anyone he hires. If the work undertaken by the hired personnel is not perfectly customer oriented, he will lose reputation and good will. Looking at the nature of his illness, any unfavorable condition will be detrimental for his health. In contrast to the big show room he possesses, the sales figures have gone down. He is of the opinion that purchasing of the new show room had not been a good decision. Moving to home based operation:
Since discounts are offered only to those retailers who own their show rooms to meet the overhead expenditure, he will be deprived of any favorable discount. Although the total operating expenses will go down by 35%
The rise in revenue was rapid starting from the year of operations. The key period of business was from April to September were revenues were equal to 65% of total revenue as the product was seasonal. The basis of forecasting for the year 1981 & 1982 is the expectations of sales by Mr. Turner & Mr. Rose. It is given that total sales were $ 15.80 million in first half of year 1981 and the total sales in 1981 to reach $ 30 million. Profit after tax was expected to be $ 1 million for 1st half and we assumed for the next half, profit will be in proportion to first half & expected to be amounting to $ 0.90 million. For year 1982, the sales expectation by Mr. Rose was around more than $ 71 million &
Mendel Paper Company has been doing relatively well with the sales of computer paper, napkins, place mats, and poster board. With more people eating out, the demand for napkins and place mats have increased. Computer paper and poster boards have slowly increased in demand as well. However, there is concern at the company with the fixed cost of operations. Marlene Herbert, the plant superintendent, said, “As we have automated our operation, we have experienced increases in fixed overhead and even variable overhead. And, we will have to add more equipment since it appears that we need even more plant capacity. We are operating over our normal capacity as it is.” (Case 2B). With the new production costs added in, will
Model Description The model takes much of the busywork out of the case, enabling students to spend more time on interpretation and evaluation. Like most case models, the student and instructor versions differ only in regard to the input data. The instructor’s version contains the complete base case inputs, while these inputs are zeroed out in the student version of the model. The model for this case takes the input data (cost pool values and allocation rates) and allocates overhead costs from the three overhead departments to the three patient services departments using all four allocation methods. Additionally, the model calculates the profitability of each patient services department under each allocation method. The model’s (instructor’s version) Input Data and Key Output sections are as follows:
1. The local Mastermind store sells innovative educational toys. Part of their service is giving advice to customers about the best toys for a particular age group, which requires having more customer service representatives in the store. During the month long Christmas buying season, it makes half of its $500,000 yearly sales. Its contribution margin on average is 40% and its fixed costs for the year are about $150,000. The owner believes that she could make even higher sales, if she had more customer service representatives on the floor during the peak season. She plans on hiring four more people for 200 hours each at $20 per hour. How much additional revenue does she have earn to the nearest dollar
The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services and has estimated demand in three categories low, medium and high.
If Marlene Herbert were to discontinue place mats, he would miss $270,000 that will go toward Mendel paper company fixed cost. The company currently has a plant overhead that is estimated at $420,000 for the quarter. In addition to the fixed plant overhead, the plant incurs fixed selling and administrative expenses per quarter of $118,000. This draws the company to a total fixed cost of $538,000. If Marlene Herbert were to discontinue the second highest contributor to the fixed cost, he would need to increase the volume of computer paper and lower material cost to help pull the contribution margin of the lowest product up to help support the lost of a whole product line.
Mr. Salter asked me to analyze the capitated managed care agreement with the city and determine the full cost profit/loss and the differential cost profit/loss. Then based on this information, determine whether we should renew the contract for the next year at present rates or ask for a rate increase.
To find out all available options and their pros and cons my team has put together the following analysis:
16. Replenish (421) -to make full or complete again, as by supplying what is lacking, used up, etc.
v. What are the limitations, if any, to the estimates of the profitability of the two customers? (Hint: Consider what improvements could be made to the accounting system to obtain more accurate costs)
The estimate of total potential market for heater/blower unit is 2737 units and 2737000 units for blankets (see exhibit 1). The direct cost of the heater/blower unit would be $380 and $0.85 per blanket. The initial investment, $500,000, for this system would cover the fixed cost of the company during first year of operation. Based on this basic information and other considerations, the company has to determine its pricing strategy for both
ML had developed a policy of selling manual machines and renting automatic machines. Manual machines did not cost much, did not require service, and could be modified to attach different fasteners inexpensively. Automatic machines were rented on an annual basis because they would have been more expensive to sell and it provided annual income to ML. However, about 700 of the rented machines were returned each year. During the time that machines were in inventory, ML would modify the machines to attach different fasteners. This was expensive with an average cost per modification of $2000. If all 700 machines were modified during a given year this would have cost $1.4 million per year. It was also industry practice to provide preventative maintenance and
Colin's unemployment status has caused him to consider opening up his own business. His dilemma is deciding where to locate his business; either at Great Eastern Building downtown or Exploits Valley in the mall. Due to him being unemployed, Colin needs to begin earning an income to live. To do so he needs to improve his projected sales so that his net income would be sufficient to live on and to be able to pay back Ed's investment in the business.
Let’s analyze different options for the Prestige Data Services, which Mr Rowe provided and asked Bradley to estimate the effects on profits.
The case surrounds a sales manager, Joseph Frebert, From Alcon. He experienced a hard time working with skilled sales people. Adaptation to work within his people’s sales territory also proved difficult. The manager had pressure from work and domestic matters where he left everything to his fiancée, Ellen, a broker at Trout Brothers, was hard working compared to Joseph, confirmation from the large accounts she