Finance Manage
You are relatively new finance manager. You are unfamiliar with the existing production and sales numbers, but you are experienced in creating basic financial analysis and forecasting investment options. Therefore, the CEO has asked you to complete a decision data worksheet for each of the possible decisions. The decisions and worksheets are outlined in the CEO Request to Finance Manager
Staffing Details:
Executive Management - One Executive (CEO) supports the organization at $150,000 per year
Administrative Staff - The company needs one administrative staff per 20 employees (including managers). Each administrative staff costs $50,000
Management - Sales and Operations managers have a maximum capacity for 15 employees. Example 35 employees require 3 managers. Sales must have at least one manager and each product line must have at least one operations manager. Each manager costs $75,000
Employees - The labor rate for production costs include the production employees wage. Sales staffs are salary plus commission. The commission is calculated in the cost of sales, but the sales staff wages are going to be included in the staffing costs.
Sales and Administrative Overhead
The sales staff and administrative staff operated from the same corporate building and share the total administrative overhead of $15,000 per month (includes building, insurance, utilities, etc). Only one sales / admin building is needed for the company regardless of chairs sold and product lines carried.
- CEO Request to Finance Manager
As the CEO, you have been able to consult with your Operations Manager and Marketing Manager. You have most of the numbers you need but you are struggling to put the pieces together to make a sound operational decision for your company. You decide to break down the following options using a worksheet so you can build a final decision tree with as few options as possible. However, you still need the help of your Finance Manager to input the final details and indirect costs. You provide the following worksheets to your Finance Manager and request assistance:
1. Keep current product line - no project or changes
2. Keep current product line - implement improvement project in one or more buildings
1. Probability of increased demand
2. Probability of decreased demand
3. Probability of same demand
3. Reduce product line to two products - no changes to remaining equipment
1. Probability of retaining business
2. Probability of not retaining business
4. Reduce product line to two products - convert third building and/or implement quality project in remaining two buildings (calculate only if 3(a) sales demand exceeds production capacity)
5. Reduce product line to one product - no conversions or quality improvement
1. Probability of retaining business
2. Probability of not retaining business
6. Reduce product line to one product - convert one or two buildings and/or implement quality improvement in remaining building (Calculate only if 5(a) sales exceed production capacity)