Question 1: I.G. Farben has 600 units in works in progress and 500 units in finished inventory. The following represents a snippet of their balance sheet. How might you improve their management of assets? Pay particular attention to JIT, TQM, process reengineering, and financial strategies. What else could you suggest to enhance the organizational performance?
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Current Assets
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Current Liabilities
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Cash & Equivalents
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100,000
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Accounts Receivable
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2,500,000
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Accounts Payable
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1,000,000
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Inventory
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Notes Payable
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20,000,000
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-Raw Material
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369,000
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-Works in Progress
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5,440,000
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-Finished Goods
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7,000,000
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Question 2. Given the following raw data from Mammas Manufacturing, construct the cost of goods manufactured
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Advertising Expense
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120,000
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Depreciation: office equipment
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5,000
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Depreciation: factory equipment
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20,000
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Direct Labor Cost
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10,000
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Purchases of Raw Materials
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80,000
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Supplies: Factory
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1,500
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Utilities: Factory
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14,870
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Rent: Factory
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24,000
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Sales Commission
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93,000
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Maintenance Factory
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2,300
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Indirect Labor
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24,600
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Inventory
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Start of Period
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End of Period
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Raw Material
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4500
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12000
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Works in Progress
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6000
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20000
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Finished Goods
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50,000
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10,000
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Question 3. The latest annual data for North Korean Nuclear Enterprises is in the following table. Assuming a predetermined overhead rate of 5 per machine hour and a total usage of 10,000 machine hours, compute the amount of under or over applied overhead cost for the year.
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Manufacturing overhead
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Property Tax: factory
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3000
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Utilities: factory
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4000
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Indirect labor
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11000
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Depreciation: factory
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20000
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Insurance: factory
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6000
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Total actual Manufacturing overhead
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44000
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Other Costs Incurred
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Purchases of raw materials
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30000
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Direct labor
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42000
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Inventories
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Raw materials: start of period
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8000
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Raw materials: end of period
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7000
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Work in Progress: start of period
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6000
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Work in Progress: end of period
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8000
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Question 4. Ruger has the following cost relationships at sales of 5,000 units at $2.00 per unit.
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Administrative expense
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$1000 + 0.10 per unit
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Selling Expense
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$500 + 0.50 per unit if unit sales are less than 4000
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$1 000 + 0.25 per unit if unit sales are greater than 4000
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Production
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$1000 if sales are 0
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$1500 if sales are between 0 and 3000
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$2000 if sales are between 3000 and 6000
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$2500 + 0.05 per unit if sales are greater than 6000
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Create a contribution and a traditional income statement. What are the advantages and disadvantages of each?
Question 5. Dred Scott Enterprises has sales of 10,000 units at $1,000 each. Its variable expenses are $200 per unit and fixed expenses are $500,000 if production is under 11,000 units and $1,000,000 if production is greater than or equal to 11,000. Marketing proposes they spend an additional $10,000 and that sales will increase to 11,500. Should you agree to the marketing department's proposal. Compute the BEP and contribution margin under both scenarios. Should you, as CEO, agree to marketing's proposal? Justify your answer.