Green manufactures agricultural equipment and is planning to develop and launch a new fuel efficient tractor. Required: Discuss how the strategic management accounting techniques below could offer Green opportunities for improving performance and ways to seek to achieve cost reduction. Just-in-time and the Theory of Constraints
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Green manufactures agricultural equipment and is planning to develop and launch a new fuel efficient tractor.
Required:
Discuss how the strategic
Just-in-time and the Theory of Constraints
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- In today's fast-paced business environment, decision making is a critical task for managers. Making the right decisions is vital to the success of a company, and it requires access to relevant information. Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019) Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made 360,000 360,000 Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made 850,000 850,000 Variable manufacturing costs Direct material cost per EC…In today's fast-paced business environment, decision making is a critical task for managers. Making the right decisions is vital to the success of a company, and it requires access to relevant information. Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019) Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made 360,000 360,000 Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made 850,000 850,000 Variable manufacturing costs Direct material cost per EC…In today's fast-paced business environment, decision making is a critical task for managers. Making the right decisions is vital to the success of a company, and it requires access to relevant information. Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019) Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made 360,000 360,000 Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made 850,000 850,000 Variable manufacturing costs Direct material cost per EC…
- In today's fast-paced business environment, decision making is a critical task for managers. Making the right decisions is vital to the success of a company, and it requires access to relevant information. Cari Pump (CP) Company manufactures water pumps. An important part of the pump is its electronic component (EC). Cari Pump collects data with the following cost information about the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019) Expected Costs (2020) Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if ECs are not made 360,000 360,000 Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if ECs are not made 850,000 850,000 Variable manufacturing costs Direct material cost per EC…Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company's operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities: Initial Added Cost Variable Cost Variable Savings Recycle and reuse production materials $ 5,000 $0.10 per lb. of recycled material $0.15 per lb. of recycled material Add solar panels as a source of power 700,000 $ 1,000 per year $ 33,000 per year Replace assembly room light fixtures with natural light 120,000 $ 180 per month $ 220 per month The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect. a. Identify which CSR activities Green Manufacturing should…Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company's operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities: Initial Added Cost Variable Cost Variable Savings Recycle and reuse production materials $ 5,000 $0.10 per lb. of recycled material $0.15 per lb. of recycled material Add solar panels as a source of power 700,000 $ 1,000 per year $ 33,000 per year Replace assembly room light fixtures with natural light 120,000 $ 180 per month $ 220 per month The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect. a. Identify which CSR activities Green Manufacturing should…
- Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company's operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities: Initial Added Cost Variable Cost Variable Savings Recycle and reuse production materials $ 5,000 $0.10 per lb. of recycled material $0.15 per lb. of recycled material Add solar panels as a source of power 700,000 $ 1,000 per year $ 33,000 per year Replace assembly room light fixtures with natural light 120,000 $ 180 per month $ 220 per month The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect. a. Identify which CSR activities Green Manufacturing should…Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company’s operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities: Initialadded cost Variable cost Variable savings Recycle and reuse production material $5,000 $0.10 per lb. of recycled material $0.15 per lb. of recycled material Add solar panels as a source of power 700,000 $1,000 per year $33,000 per year Replace assembly room light fixtures with natural light 120,000 $180 per month $220 per month The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect. a. Determine if it is viable to recycle and use…The jarvis corporation produces bucket loader assemblies for the tractor industry. The product has a long term life expectancy. Jarvis has a traditional manufacturing and inventory system. Jarvis is considering the installation of a just-in-time inventory system to improve its cost structure. In doing a full study using its manufacturing engineering team as well as consulting with industry JIT experts and the main vendors and suppliers of the components Jarvis uses to manufacture the bucket loader assemblies, the following incremental cost-benefit relevant information is available for analysis: The Jarvis cost of investment capital hurdle rate is 15%. One time cost to rearrange the shop floor to create the manufacturing cell workstations is $275,000. One time cost to retrain the existing workforce for the JIT required skills is $60,000. Anticipated defect reduction is 40%. Currently there is a cost of quality defect assessment listed as $150,000 per year. The setup time for…
- Company X produces radio equipment. Thecompany is considering the use of high-quality materials to enhance the quality of itsproducts and create a positive reputation inthe market. If the company applies the plan,the variable cost per unit would increase. Thecompany will also need to pay additionalmoney into an advertising campaign. Overall,the company expects that contributionmargin would increase. Moreover, thecompany expects that the additionaladvertising costs would be lower than theincrease in contribution margin. What wouldbe the effect of the new plan on operatingincome?Kagle design engineers are in the process of developing a new green product, one that will significantly reduce impact on the environment and yet still provide the desired customer functionality. Currently, two designs are being considered. The manager of Kagle has told the engineers that the cost for the new product cannot exceed 550 per unit (target cost). In the past, the Cost Accounting Department has given estimated costs using a unit-based system. At the request of the Engineering Department, Cost Accounting is providing both unit-and activity-based accounting information (made possible by a recent pilot study producing the activity-based data). Unit-based system: Variable conversion activity rate: 100 per direct labor hour Material usage rate: 20 per part ABC system: Labor usage: 15 per direct labor hour Material usage (direct materials): 20 per part Machining: 75 per machine hour Purchasing activity: 150 per purchase order Setup activity: 3,000 per setup hour Warranty activity: 500 per returned unit (usually requires extensive rework) Customer repair cost: 25 per repair hour (average) Required: 1. Select the lower-cost design using unit-based costing. Are logistical and post-purchase activities considered in this analysis? 2. Select the lower-cost design using ABC analysis. Explain why the analysis differs from the unit-based analysis. 3. What if the post-purchase cost was an environmental contaminant and amounted to 10 per unit for Design A and 40 per unit for Design B? Assume that the environmental cost is borne by society. Now which is the better design?Southland Corporation’s decision to produce a new line of recreational products resulted in the need to construct either a small plant or a large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium, or high. The following payoff table shows the projected profit in millions of dollars: What is the decision to be made, and what is the chance event for Southland’s problem? Construct a decision tree. Recommend a decision based on the use of the optimistic, conservative, and minimax regret approaches.
