Imagine Industries, is a multinational firm that designs and produces tourist merchandise for major destinations worldwide. The company's board of directors is meeting to discuss changes that might be needed in the company's operations. At the end of the meeting, the board plans to examine Imagine industries' company issues on ability to produce enough output, new production process the company could use to create its product and issues relating to selection of a new location for production operations. b. Proposed to the board of directors of Imagine Industries, any TWO (2) potential ways to finance their business operations.

Imagine Industries, is a multinational firm that designs and produces tourist merchandise for major destinations worldwide. The company's board of directors is meeting to discuss changes that might be needed in the company's operations. At the end of the meeting, the board plans to examine Imagine industries' company issues on ability to produce enough output, new production process the company could use to create its product and issues relating to selection of a new location for production operations. b. Proposed to the board of directors of Imagine Industries, any TWO (2) potential ways to finance their business operations.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 2CDQ

See similar textbooks

Similar questions

Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell Moore, controller for Global Reach, has been reading about the advantages of foreign trade zones. He wonders if locating in one would be of benefit to his company, which imports about 90 percent of its merchandise (e.g., chess sets from the Philippines, jewelry from Thailand, pottery from Mexico, etc.). Darnell estimates that the new warehouse will store imported merchandise costing about 16.78 million per year. Inventory shrinkage at the warehouse (due to breakage and mishandling) is about 8 percent of the total. The average tariff rate on these imports is 5.5 percent. Required: 1. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in tariffs? Why? (Round your answer to the nearest dollar.) 2. Suppose that, on average, the merchandise stays in a Global Reach warehouse for nine months before shipment to retailers. Carrying cost for Global Reach is 6 percent per year. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.) 3. Suppose that the shifting economic situation leads to a new tariff rate of 13 percent, and a new carrying cost of 6.5 percent per year. To combat these increases, Global Reach has instituted a total quality program emphasizing reducing shrinkage. The new shrinkage rate is 7 percent. Given this new information, if Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.)
Tesla, the world’s largest carmaker (as determined by market capitalization), understands that their primary target market responds well to brands that focus on social responsibility. Tesla’s senior management has been meeting to devise a global marketing campaign centered on social responsibility. To this end, Tesla decided to hire a consultancy to develop a 9-month plan ending December 31, 2022. Management has asked for a presentation for an initial list of items that would be considered valid elements of a social responsibility marketing plan that would accommodate each of the markets that Tesla competes in. Questions: What type of research would the consultancy conduct to understand each of the wide variety of cultures that the brand competes in? Armed with this researched information, how might the consultancy modify its social responsibility campaigns to accommodate some of the major markets?
Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors. The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery. New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few years so cost of borrowing is on higher side which will increase firm cost of capital. The board of directors are of the opinion…
Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors. The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery. New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few years so cost of borrowing is on higher side which will increase firm cost of capital. The board of directors are of the opinion…
Osama Co. is a listed company operating in the textile industry. Osama Co’s board of directors met recently to discuss a new strategy for the business. The proposal put forward was to sell all the old plant and machinery and use this fund as well as borrow from market to purchase new plant and equipment. The new plant and machinery are more productive and meet the current standard quality required by the international buyers. It is also argued that new plant is more energy efficient and environment friendly that gives more advantage when facing international competitors. The proposal stated that the funds raised from the sale of the old plant and machinery would be used to buy the new plant and machinery. New borrowing for the balance amount will be made from local bank which offered lowest rate. Since inflation is on higher side compared to last few years so cost of borrowing is on higher side which will increase firm cost of capital. The board of directors are of the opinion…
Classify the following decisions as being characteristic of strategic planning, tactical planning, managerial control, or operational control. Determining the mix of products to manufacture this year Examining whether the number of defective goods manufactured is within a certain range Expanding a product line overseas Determining the best distribution route Examining whether the cost of raw materials is within a certain range Examining whether personnel development cost is rising Employing more automated manufacturing this year Examining whether the amount of scrap material is acceptable Building a new plant facility Examining whether employees’ attitudes are improving Examining whether production levels are within a predicted range Making purchasing arrangements with a new supplier Increasing production capabilities this year by purchasing a more efficient piece of machinery Closing a plant
Gemma Company is a midsize manufacturing company with 120 employees and approximately $45 million in sales. Management has established a set of processes to purchase fixed assets, described in the following paragraphs: When a user department decides to purchase a new fixed asset, the departmental manager prepares an asset request form. When completing the form, the manager must describe the fixed asset, the advantages or efficiencies offered by the asset, and estimates of costs and benefits. The asset request form is forwarded to the director of finance. Personnel in the finance department review estimates of costs and benefits and revise these if necessary. A discounted cash flow analysis is prepared and forwarded to the vice president of operations, who reviews the asset request forms and the discounted cash flow analysis, and then interviews user department managers if he or she feels it is warranted. After this review, she selects assets to purchase until she has exhausted the…
Tim Johnson is a news reporter and feature writer for The Wall Street Review, an important daily newspaper for financial managers. Tim’s assignment is to develop two feature articles: one on life-cycle costing and one on business analytics, including interviews with chief financial officers and operating managers. Tim has a generous travel budget for research into company history, operations, and market analysis for the firms he selects for the article. Tim has asked you to recommend industries and firms that would be good candidates for the article. What would you advise? Explain your recommendations.
The Monroe Forging Company sells a corrugated steel product to the Standard Manufacturing Company and is in competition on such sales with other suppliers of the Standard Manufacturing Co. The vice president of sales of Monroe Forging Co. believes that by reducing the price of the product, a 40% increase in the volume of units sold to the Standard Manufacturing Co. could be secured. As the manager of the cost and analysis department, you have been asked to analyze the proposal of the vice president and submit your recommendations as to whether it is financially beneficial to the Monroe Forging Co. You are specifically requested to determine the following: (a) Net profit or loss based on the pricing proposal. (b) Unit sales volume under the proposed price that is required to make the same $40,000 profit that is now earned at the current price and unit sales volume. Use the following data in your analysis:
As CEO of Riverside Marine, Rachel Moore knows it is important to control costs and to respond quickly to changes in the highly competitive boat-building industry. When Gerbig Consulting proposes that Riverside Marine invest in an ERP system, she forms a team to evaluate the proposal: the plant engineer, the plant foreman, the systems specialist, the human resources director, the marketing director, and the management accountant. A month later, the management accountant Miles Cobalt reports that the team and Gerbig estimate that if Riverside Marine implements the ERP system, it will incur the following costs: Costs of the Project a.$390,000 in software costs b. $85,000 to customize the ERP software and load Riverside Marine'sdata into the new ERP system c. $112,000 for employee training Benefits of the Project a. More efficient order processing should lead to savings of $185,000. b. Streamlining the manufacturing process so that it maps into the ERP…
Ben and Sons Co Ltd, a machine intensive manufacturing company situated in the Northen province of Zambia intends to introduce a high technology product in response to the market dynamics. Major proportion of the product’s cost will depend on the decisions made early in its lifecycle. The product will face competition from four major brands already on the market. The Managing Director, Mr William Mwape, has just attended a seminar organized by CA Zambia which covered modern management accounting techniques such as lifecycle costing, JIT system, backflush and throughput accounting etc. He now wishes to implement the knowledge acquired in order to maximize return over the product’s lifecycle. Required: (c) State possible ways of improving throughput accounting ratio of a product.
To emphasize that any decision encompasses qualitative, as well as quantitative, factors, answer one or the following questions: 1.A diversified food company is considering the closing of its Condiment Division. What qualitative factors should be considered before discontinuing a division or product line? 2.An automobile manufacturer has decided to allow outside suppliers to bid on all parts necessary to make its vehicles. What qualitative factors should be considered by management in deciding whether or not to turn over the production of a part to an outside supplier? 3.What are the qualitative factors you might consider when determining whether or not to replace your car?