Problem 1: Mountain Mist Inc's cost a capital is 11 percent.in 2008,one of the firm's divisions generated an EVA of $1,130,000.The fair market value of the capital investment in that division was $26,500,000. How much after tax income was generated by the division in 2008?
Problem 2: Spruce Enterprise operates a chain of lumber stores.In 2008, corporate management examined industry level data and determined the following performance targets for lumber retail stores.
Asset Turnover 1.7
Profit margin 8.0%
The actual 2008 results for the company's lumber retail stores follow:
Total Assets at the beginning of year $10,200,000
Total assets at the end of year $12,300,000
Sales $28,250,000
Operating expense $25,885,000
a. For 2008,how did the lumber retail stores perform relative to their industry norms?
b. Where,as indicated by he performance measures are the most likely areas to improve performance in the retail lumber stores?
c. What are the advantages and disadvantages of setting performance target to start of the year compared with one that is determined at the end of the year based on actual industry performance?
Problem 3: For each of the following items indicate one performance measurements that could be obtained from a cost management systems.Classify each item into one of the four balanced scorecard perspectives.
a. Quality
b.Cost
c.Production line flexibility
d.People productivity and development
e.Inventory management
f.Lead time
g.Responsive after-sale service
h.Customer satisfaction and retention
i.Product and process design
j.Manufacturing planning process.
k.Procurement process
l. Manufacturing process
m. Management accomplishment
n. Marketing/Sales and customer sales
o.Delivery performance
p.Financial accounting service.
Problem 4: Taurus Tools has developed a new kitchen utensil.The firm has conducted significant market research and estimated the following pattern for sales of the new product.
Year Expected Volume Expected Price per unit
1 38,000 $19
2 48,000 18
3 90,000 16
4 40,000 12
If the firm desires to net $4.50 per unit in profit over the life of the product,what is the target cost to produce the new utensil?
Problem 5: William Manufacturing Company began implementing a just in time inventory system several months ago.The production and purchasing manager,however have not seen any dramatic improvements in throughput.They have decided that the problems are related to their suppliers.The company's three suppliers seem to send the wrong material at the wrong times.Prepare a discussion of the problem that may exist in this situation.Address the following the internal and external communication:possible engineering changes and their impacts;number,quality, and location of suppliers.