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- 1. Dell's business plan is to promote a direct rapport with the client. They expect to have this rapport by "merging its direct client model with an extremely effective production and supply chain management company and a focus on standards-based systems." In short, they wish to provide the client with the exceptional value of their item with a great client service support network. This direct connection to the client is exactly what Dell considers as the most crucial to enhance its client base and in maintaining old ones. Through getting rid of the middle man, Dell expects to remove wholesale and retail traders which increase time, cost, and might lack the product information sufficient enough for Dell's standards. I would state that Dell depends mainly on customer intimacy to preserve and get new clients. As said in their starting paragraph; "a direct rapport is the most effective way to the client," it's obvious that they value the link with their client the most. They also try to get rid of the middle man and wholesalers which may discredit their item or not provide the level of service which they would require from their own workers. There is also an internet site that clients can visit to assess Dell's products and read comments on the items. Theory of Constraints "The theory of constraints is founded on the insight which effectively controlling the constraint is a key to success" (Noreen and Brewer 2008, pg. 15). As the old saying goes, you are just as powerful as your weakest link. A Rolls Royce having a flat tire isn't going to run effectively or make it very far. The same analogy applies to my last place of work. I worked being the administrator of a cafe in which customer care is everything. Clients understand what they are receiving with the food and whether it's undercooked, overcooked, and so on does not matter a great deal since that's quite easily fixable. The service of the wait staff is everything and can really make or break a client's experience Kranbrack Corporation The measures of Mr. Gallant were completely immoral. We have observed in this technologically advance times what bad accounting methods can do to an organization, its buyers, and the economy. I believe the greatest ramifications of this method fall on
- 2. the shareholders, who can base their investing judgments on balance sheet and income reports. In case these income reports are falsified or just simply incorrect, then the investor is deceived into considering the organization is either under or overvalued. The Fashion Shoe Company 1. The break-even point is $510,000. 3. 12,000 shoes ($12 net profit/shoe)-150,000 = operating loss of $6,000 Downsizing and fixed cost The post, Industry’s Downsizing Lessons, says that the automobile production industry, the computer industry and a few government departments have got greatly started out cutting down their fixed costs-mainly their long term salaried members of staff. This can also be referred to as operating leverage which means, “The level to which they are really focused on fixed expenses like for example property, factory, related equipment and full-time salaried members of staff”. Direct Labor: variable or fixed I believe that direct labor is actually a fixed cost. To begin with, "administrators are unwilling to reduce their workforce in reaction to short-term reductions in sales." As a lot of time and money goes into training these workers, a short-term fall in sales doesn't warrant workers getting fired since they are not quickly replaced. Next, "managers don't want to be caught with a bloated payroll in an economic depression." This might be due to an increase in sales therefore they don't want to over hire full-time people. As a result, direct labor can be a fixed cost if the worker is full-time or part-time, however if they are a temporary employees then I would think of them a variable cost. Jet Blue 7-26
- 3. 1. Jet Blue's technique entails becoming "a top low-fare, low-cost passenger airline providing customers high-quality client service and a differentiated product." They do this by concentrating on operational quality. They expect to generate demand by keeping their reduced fares and enhancing demand with "fare conscious" people. They also wish to spotlight low operating expense in their business plan. They accomplish their reduced unit costs "mainly through keeping high aircraft usage, operating just one aircraft type with a single type of service, using sophisticated technologies and employing an incentivized and productive labor force." They expect to reduce their operating cost through enhancing aircraft efficiency, with an effective workforce, and by having reduced distribution cost compared to their rivals. Fixed labor 1. a. Absorption Costing Direct supplies $48 Variable production overhead $2 Total variable production cost $50 Fixed production overhead ($360,000/12000 units) $30 Unit product cost $80 b. Variable Costing Direct supplies $48 Variable production overhead $2 Unit product cost $50
- 4. Profitability 1 First-Stage Allocations to Activity Cost Pools Activity Cost Pools Cleaning Carpets Travel to Jobs Job Support Other Total Salaries $ 105,000 $ 30,000 $ - $ 15,000 $ 150,000 Cleaning Materials $ 40,000 $ - $ - $ - $ 40,000 Cleaning Equipment depreciation $ 16,000 $ - $ - $ 4,000 $ 20,000 Auto Expenditures $ - $ 48,000 $ - $ 32,000 $ 80,000 Office Expenditures $ - $ - $ 27,000 $ 33,000 $ 60,000 President's Compensation $ - $ - $ 32,000 $ 48,000 $ 80,000 Total $ 161,000 $ 78,000 $ 59,000 $ 132,000 $ 430,000 Master budget exercise Exercise 8-12 1. Jessi Corporation Sales Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Budgeted unit sales............. 11,000 12,000 14,000 13,000 50,000 Selling price per unit............ × $18.00 × $18.00 × $18.00 × $18.00 × $18.00
- 5. Total sales.......................... $198,000 $216,000 $252,000 $234,000 $900,000 Schedule of projected Cash Collections Accounts receivable, starting balance............. $ 70,200 $ 70,200 1st Quarter sales.................. 128,700 $ 59,400 188,100 2nd Quarter sales................. 140,400 $ 64,800 205,200 3rd Quarter sales.................. 163,800 $ 75,600 239,400 4th Quarter sales.................. 152,100 152,100 Total cash collections........... $198,900 $199,800 $228,600 $227,700 $855,000 Behavioral aspects of budgeting As per Noreen, Brewer and Garrison (2011), budgetary slack is when an administrator creates deliberate slack (i.e. decreases figures to an easily attainable number) in a budget. This frequently happens when a manager’s pay is linked to achieving budget objectives. Atkins and Granger may behave in this way if they are afraid of they will be “punished” or fined if forecasts aren't met. They also may act this way in case their benefits are dependent on their capability to achieve projection levels. Budgetary slack may cause negative effects of excessive output and resulting stock in case the sales predictions are reduced and conversely, too little production as well as a shortfall of stock in case sales forecasts are enhanced. Critiquing a cost report Going through the Freemont Corporation -Machining Department report it is possible to observe how the manager might be annoyed. All the variance unfavorable and the division went more than budget. This report however is a bit deceptive. The division worked 3000 additional machine hours than they scheduled for which caused the variable and mixed cost to increase. This is known as activity variances “since all the
- 6. variances on this report are only because of the difference in the level of activity…” (Brewer, 2011, p. 339). To me this is an illustration of a manager who must cease using the budget as a pressure device as well as examine what is actually happening. Freemont Corporation-Machining Department Flexible Budget Performance Report For the Month Ended June 30 Planning Budget Activity Variances Flexible Budget Revenue & Spending Variances Actual Results Machine- Hours 35,000 38,000 38,000 FedEx’s technique for achievement in the market involves the organization continuing to leverage and expand one of their biggest assets, the FedEx brand name, and to offer their clients with easy, smooth access to their whole portfolio of integrated business solutions. They are also following several initiatives to carry on increasing the FedEx customer experience, including increasing the capabilities of our sales experts. (1) FedEx depends on operational quality as obvious by their effort to support global expansion by adding air flights, buying planes, enhance capacity and improve services back and forth from Asia and Europe depending on the expansion prospects of these areas. They also intend on growing network capacity at their expanding FedEx Ground and FedEx Freight organizations. For example, they hope to enhance FedEx Ground’s daily package pick-up capability to roughly 5 million by 2010. (1) Variance analysis in a Hospital Materials Price Variance (AQ x AP) – (AP x SP)
- 7. (12,000 x 2.35) – (12,000 x 2.50) 28,200 – 30,000= -1,800 Valley View Hospital Variance Report – Purchasing Department Item Purchased Quantity Purchased Actual PriceStandard Price Difference in Price Total Price Variance Explanation Small Glass Plates 12,000 2.35 2.50 .15 1,800 F The plates being bought are at a good price to the standard price Perverse Effects of Some Performance Measures 1. Speed to Market: Items that might reduce performance levels would be the launch of products which haven't finished the required development by being launched too soon. Consumer comments, market testing and the fact of early launched products have a greater tendency for product recalls. To solve these problems a standard operating method is necessary to any product before it is launched into the market. Market approval is essential to the R&D before the launch of any product. Cost Management is among the most important factor of book keeping. In fact, book keeping is the basis of business and without it, companies would struggle. It is this struggle that great accountants as well as administrators avoid. By cautiously recording each bill, expenditure, and so on. A great accountant can make suggestions on the
- 8. soundness of the organization to administration and they can consequently make management decisions on what the organization can do better so as to control their expenditures better. This is where the significance of cost management comes in since without correct documents organizations might exhaust money quickly. Make or buy Han Products TOTAL COSTS – 30,000 Units of S-6 Manufacture Purchase Direct supplies 108,000 Direct labor 300,000 Variable production overhead 72,000 Net Present Value Analysis CAR WASH Requirement 1: Net annual cash flows Average weekly use of car wash and vacuums: Gross Per use Uses Car wash 1,350 2.00 675 Vacuums 405 1.00 405