Matter and its Properties Essay

The fundamental building blocks of matter are atoms and molecules. These make up elements and compounds. An atom is the smallest unit of an element that maintains the properties of that element. And element is a pure substance made of only one kind of atom. A compound is the substance that is made from the atoms of two or more elements that are chemically bonded. Water is an example of a compound because it is one of many compounds that consist of molecules. The hydrogen and oxygen molecules are chemically bonded to form a water molecule. Properties and Changes in Matter Every substance, whether an element or compound, has characteristic properties. Chemists use these properties to distinguish different substances and then use their knowledge of characteristics to separate them. A property may be a characteristic that defines an entire group of substances. That property can be used to classify an unknown substance within that group. For example, are large groups of elements is metals. The property that sets than apart from anything else is that they conduct electricity well. Therefore, if scientists find an unknown element, and test it for electricity conduction, and it turns out to conduct electricity well, it is, in fact, a metal. Properties also define subgroups or substances. And can also help to reveal the identity of an unknown substance. However, identification usually cannot be made based on only one property. Comparisons of several properties can be used to determine the identity of an unknown. Properties are either intensive or extensive. An extensive property depends on the amount of matter that is present. These properties include volume, mass, and the amount of energy in a said substance. Intensive properties, however, do not depend on the amount of matter present. These properties include the melting  point, boiling point, density, and ability to conduct electricity and heat. Regardless of how much of a substance is present, these properties will always be the same. Chemical and Physical Properties and Changes Physical Properties and Physical Changes A physical property is a characteristic that can be measured or observed without changing the identity of the substance. Physical properties describe the substance itself. Examples of these properties are properties such as melting point and boiling point. A change in a substance that does not involve a change in the identity of the substance is called a physical change. Examples of physical changes include grinding, gutting, melting, and boiling a substance or material. These changes do not change the physical identity of a property. For example: If you rip a paper in half, does that change the identity of the two torn parts? The answer is no, it is still a paper, just smaller and ripped. If you bend a paper clip, is it still a paper clip? Yes. Melting point and boiling point are part of an important classification of physical changes called change of state. A change of state is a physical change of a substance from on state to another. The three common states of matter are solid, liquid, and gas. Matter in the solid shape has a definite volume and definite shape. Matter in the liquid state has a definite value, but not a definite shape-a liquid can be molded or formed into many different shapes. Matter in the gas state has neither definite volume nor definite shape. Chemical Properties and Chemical Changes Physical properties can be observed without changing the identity of the substance, but chemical properties cannot. A chemical property relates to a substance’s ability to undergo changes that transform it into different  substances. Chemical properties are easiest to see when substances react to form (a) new substance(s). For example, when charcoal burns, it combines with oxygen in air to become a new substance, carbon dioxide gas. After this chemical change, the original substances of the charcoal, carbon and oxygen, are no longer present. Another example is the ability of iron to rust by combining with oxygen in the air (moisture). A change in which one or more substances are converted into different substances is called a chemical change or reaction. The substances that react in a chemical change are called the reactants. The substances formed by the chemical change are called the products. By burning charcoal, carbon and oxygen are the reactants in a combustion, or burning reaction. Carbon dioxide is the product. Chemical changes and reactions, such as combustion and decomposition, form products whose properties differ greatly from those of the reactants. Chemical changes, however, do not affect the total amount of matter present before and after a reaction. The amount of matter, and total mass, remain the same.

Economic Analysis of Crop Diversification Essay

There is a dramatic change in the earning, spending and saving pattern of the people of India in the post reform (economic) period that is post 1991. During this period, income generating mechanism in this country underwent massive changes. With a sustained economic growth, rising per capita income along with an ever increasing population, the dietary pattern in India is also changing very fast. The Indian food basket is diversifying in favour of high value food commodities like fruits, vegetables, dairy products, poultry products and fish products from staple food such as rice, wheat and coarse cereals. This raises a challenge to Indian agriculture. On the other hand the modern agriculture dominated by chemical and irrigation intensive farming system has not only raised productivity but simultaneously has also resulted in soil erosion, water contamination, pesticides poisoning, land degradation through water logging and soil salinity, depletion of bio-diversity, etc., forcing farmer s to apply ever-increasing doses of fertilisers and to make water supply available on a continuous basis, in order to maintain the productivity levels. This again raises another challenge to Indian agriculture. It may not be wondering if we assume that organic farming system may generate such situation to address both the challenges mentioned above. This paper is concerned with an analysis of crop diversification under organic and inorganic farming in West Bengal. Crop diversification is different from the concept of multiple cropping or succession planting over the growing seasons. Moreover, it implies the use of environmental and human resources to grow a mix of crops with complementary marketing opportunities. Thus, it implies a shifting of resources from low value crops to high value crops such as fruits, vegetables, etc. The concept of crop diversification in globalized market of agricultural produce refers to increase the total crop productivity in terms of quality, quantity and monetary value under different specific agro-climatic situations across the world. There are two approaches to crop diversification in agriculture. First is horizontal diversification, which is the primary approach to crop diversification in production agriculture. The approach takes place through crop intensification by adding new high-value crops to existing cropping systems. Thus, the approach facilitates the improvement of overall productivity of a farm or farming economy of a region. The second approach is the vertical diversification. Under this approach, farmers and others add value to products through processing, regional branding, packaging, merchandising or other efforts to enhance the farm-product. The opportunities for crop diversification may vary depending on risks, opportunities and the feasibility of proposed changes within a socio-economic and agro-economic context. However, crop diversification through substitution of one crop or mixed cropping / inter-cropping may be a useful tool to mitigate problems associated with aberrant weather to some extent, especially in the arid and semi-arid drought-prone / dry land areas. Impact of crop diversification Crop diversification is intended to practice of growing more than one crop (or enterprise) in any year to increase financial and biological stability of the farm. In the agricultural context, diversification can be regarded as the re-allocation of some of a farm’s productive resources, such as land, capital, farm equipment and paid labour, into new activities. These can be new crops or livestock products, value-adding activities, provision of services to other farmers, etc. On the other hand, diversification of agriculture refers to the shift from the regional dominance of one crop to regional production of a number of crops, to meet ever increasing demand for cereals, pulses, oilseeds, fruits and vegetables, etc. It aims to improve soil health and a dynamic equilibrium of the agro-ecosystem. Crop diversification takes into account the economic returns from different value-added crops. Crop diversification can better tolerate the ups and downs in the market value of farm produ cts and may ensure economic stability for farming families of the state. The adverse effects of aberrant weather, such as erratic and scanty rainfall and drought are very common in a vast area in agricultural production of the state. Incidents of flood in one part and drought in the other part are a very frequent phenomenon in the state. Under these aberrant weather situations, dependence on one or two major cereals (rice, wheat, etc.) is always risky. Diversification in agriculture has tremendous impact on the agro-socio-economic condition and uplifting resource-poor farming communities. It generates income and employment for rural youth year round for the ultimate benefits of the farmers in the state. It implies the use of local resources in a larger mix of diverse cropping systems and livestock, aquaculture and other non-farm sectors in the rural areas. Problem statement The yield as well as farm income is the essential part for crop diversification for the farmer of an agricultural based economy like West Bengal. Normally, the farmers diversify farm enterprises to meet the cash requirements of the family and to mitigate risk associated with mono-cropping, depending on conventional wisdom over the years. The crop diversification in the state is also considered with greater emphasis from the view point to price response, market infrastructure, availability of resources and public interventions (price and credit policies of farming business, research and development in farming activities, etc.) in agriculture. The judicious crop mix has facilitated increased farm incomes. It has also contribution towards the utilization of under employed resources to mitigate seasonal and under unemployment of rural labour force. The crop diversification has also helped to reduce risks and uncertainties in crops yields due to climatic and biological vagaries. Thus the study was conducted to analyze the extent of crop diversification at different levels of farm size as well as crop growing seasons in West Bengal for both inorganic and organic farming systems, commonly followed by the farmers in the state.

Cost Accounting Chapter 11

Horngren, C. T. , Datar, S. M. and Foster, G. (2003) Cost Accounting – A Managerial Emphasis, Pearson Education, Inc. , New Jersey, Eleventh Edition CHAPTER 11 DECISION MAKING AND RELEVANT INFORMATION 11-1 The five steps in the decision process outlined in Exhibit 11-1 of the text are: 1. 2. 3. 4. 5. Obtain information Make predictions about future costs Choose an alternative Implement the decision Evaluate performance to provide feedback 11-2 Relevant costs are expected future costs that differ among the alternative courses of action being considered.Historical costs are irrelevant because they are past costs and, therefore, cannot differ among alternative future courses of action. 11-3 No. Relevant costs are defined as those expected future costs that differ among alternative courses of action being considered. Thus, future costs that do not differ among the alternatives are irrelevant to deciding which alternative to choose. 11-4 Quantitative factors are outcomes that are m easured in numerical terms. Some quantitative factors are financial––that is, they can be easily expressed in monetary terms. Direct materials is an example of a quantitative financial factor.Qualitative factors are outcomes that are difficult to measure accurately in numerical terms. An example is employee morale. 11-5 Two potential problems that should be avoided in relevant cost analysis are: 1. 2. Do not assume all variable costs are relevant and all fixed costs are irrelevant. Do not use unit-cost data directly. It can mislead decision makers because a. it may include irrelevant costs, and b. comparisons of unit costs computed at different output levels lead to erroneous conclusions 11-6 No. Some variable costs may not differ among the alternatives under consideration and, hence, will be irrelevant.Some fixed costs may differ among the alternatives and, hence, will be relevant. 11-7 No. Some of the total unit costs to manufacture a product may be fixed costs, and, hence, will not differ between the make and buy alternatives. These fixed costs are irrelevant to the make-or-buy decision. The key comparison is between purchase costs and the costs that will be saved if the company purchases the component parts from outside plus the additional benefits of using the resources freed up in the next best alternative use (opportunity cost). 1-8 Opportunity cost is the contribution to income that is forgone (rejected) by not using a limited resource in its next-best alternative use. 11-1 11-9 No. When deciding on the quantity of inventory to buy, managers must consider both the purchase cost per unit and the opportunity cost of funds invested in the inventory. For example, the purchase cost per unit may be low when the quantity of inventory purchased is large, but the benefit of the lower cost may be more than offset by the high opportunity cost of the funds invested in acquiring and holding inventory. 1-10 No. Managers should aim to get the highest co ntribution margin per unit of the constraining (that is, scarce, limiting, or critical) factor. The constraining factor is what restricts or limits the production or sale of a given product (for example, availability of machine-hours). 11-11 No. For example, if the revenues that will be lost exceed the costs that will be saved, the branch or business segment should not be shut down. Shutting down will only increase the loss. Allocated costs are always irrelevant to the shutting down decision. 1-12 Cost written off as depreciation is irrelevant when it pertains to a past cost. But the purchase cost of new equipment to be acquired in the future that will then be written off as depreciation is often relevant. 11-13 No. Managers tend to favor the alternative that makes their performance look best so they focus on the measures used in the performance-evaluation model. If the performanceevaluation model does not emphasize maximizing operating income or minimizing costs, managers will most likely not choose the alternative that maximizes operating income or minimizes costs. 1-14 The three steps in solving a linear programming problem are: 1. 2. 3. Determine the objective function. Specify the constraints. Compute the optimal solution. 11-15 The text outlines two methods of determining the optimal solution to an LP problem: 1. Trial-and-error solution approach 2. Graphical solution approach Most LP applications in practice use standard software packages that rely on the simplex method to compute the optimal solution. 11-2 11-16 (20 min. ) Disposal of assets. 1. This is an unfortunate situation, yet the $80,000 costs are irrelevant regarding the decision to remachine or scrap.The only relevant factors are the future revenues and future costs. By ignoring the accumulated costs and deciding on the basis of expected future costs, operating income will be maximized (or losses minimized). The difference in favor of remachining is $3,000: (a) Remachine Future revenues Deduct future costs Operating income Difference in favor of remachining $35,000 30,000 $ 5,000 $3,000 (b) Scrap $2,000 – $2,000 2. This, too, is an unfortunate situation. But the $100,000 original cost is irrelevant to this decision.The difference in relevant costs in favor of rebuilding is $7,000 as follows: (a) Replace New truck Deduct current disposal price of existing truck Rebuild existing truck $102,000 10,000 – $ 92,000 $7,000 (b) Rebuild – – $85,000 $85,000 Difference in favor of rebuilding Note, here, that the current disposal price of $10,000 is relevant, but the original cost (or book value, if the truck were not brand new) is irrelevant. 11-3 11-17 (10 min. ) The careening personal computer. Considered alone, book value is irrelevant as a measure of loss when equipment is destroyed.The measure of the loss is replacement cost or some computation of the present value of future services lost because of equipment loss or damage. In the specific case des cribed, the following observations may be apt: 1. A fully depreciated item probably is relatively old. Chances are that the loss from this equipment is less than the loss for a partially depreciated item because the replacement cost of an old item would be far less than that for a nearly new item. 2. The loss of an old item, assuming replacement is necessary, automatically accelerates the timing of replacement.Thus, if the old item were to be junked and replaced tomorrow, no economic loss would be evident. However, if the old item were supposed to last five more years, replacement is accelerated five years. The best practical measure of such a loss probably would be the cost of comparable used equipment that had five years of remaining useful life. The fact that the computer was fully depreciated also means the accounting reports will not be affected by the accident. If accounting reports are used to evaluate the office manager's performance, the manager will prefer any accidents to be on fully depreciated units. 11-18 (15 min. Multiple choice. 1. (b) Special order price per unit Variable manufacturing cost per unit Contribution margin per unit Effect on operating income = $1. 50 ? 20,000 units = $30,000 increase $1,200,000 $48 9 $57 1,140,000 60,000 25,000 $ 85,000 $6. 00 4. 50 $1. 50 2. (b) Costs of purchases, 20,000 units ? $60 Total relevant costs of making: Variable manufacturing costs, $64 – $16 Fixed costs eliminated Costs saved by not making Multiply by 20,000 units, so total costs saved are $57 ? 20,000 Extra costs of purchasing outside Minimum overall savings for Reno Necessary relevant costs that would have to be saved in manufacturing Part No. 75 11-4 11-19 (30 min. ) Special order, activity-based costing (CMA, adapted). 1. Award Plus's operating income under the alternatives of accepting/rejecting the special order are: Without OneWith OneTime Only Time Only Special Order Special Order 7,500 Units 10,000 Units Revenues Variable costs: Direc t materials Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income 1 2 Difference 2,500 Units $250,000 87,500 100,000 12,500 –– –– 200,000 $ 50,000 $1,125,000 262,500 300,000 75,000 1,375,000 350,000 2 400,000 3 87,500 1 275,000 275,000 175,000 175,000 1,087,500 1,287,500 $ 37,500 $ 87,500 $300,000 ? 10,000 7,500 3 $262,500 ? 10,000 7,500 $75,000 + (25 ? $500) Alternatively, we could calculate the incremental revenue and the incremental costs of the additional 2,500 units as follows: Incremental revenue $100 ? 2,500 Incremental direct manufacturing costs Incremental direct manufacturing costs Incremental batch manufacturing costs Total incremental costs Total incremental operating income from accepting the special order $262,500 ? 2,500 7,500 300,000 ? ,500 7,500 $500 ? 25 $250,000 87,500 100,000 12,500 200,000 $ 50,000 Award Plus should accept the one-time-only specia l order if it has no long-term implications because accepting the order increases Award Plus's operating income by $50,000. If, however, accepting the special order would cause the regular customers to be dissatisfied or to demand lower prices, then Award Plus will have to trade off the $50,000 gain from accepting the special order against the operating income it might lose from regular customers. 11-5 11-19 (Cont’d. ) 2. Award Plus has a capacity of 9,000 medals.Therefore, if it accepts the special one-time order of 2,500 medals, it can sell only 6,500 medals instead of the 7,500 medals that it currently sells to existing customers. That is, by accepting the special order, Award Plus must forgo sales of 1,000 medals to its regular customers. Alternatively, Award Plus can reject the special order and continue to sell 7,500 medals to its regular customers. Award Plus's operating income from selling 6,500 medals to regular customers and 2,500 medals under one-time special order follow: Revenues (6,500 ? $150) + (2,500 ? 100) 1 1 Direct materials (6,500 ? $35 ) + (2,500 ? $35 ) 2 2 Direct manufacturing labor (6,500 ? $40 ) +(2,500 ? $40 ) 3 Batch manufacturing costs (130 ? $500) + (25 ? $500) Fixed manufacturing costs Fixed marketing costs Total costs Operating income 1 $1,225,000 315,000 360,000 77,500 275,000 175,000 1,202,500 $ 22,500 $35 = $262,500 7,500 2 $40 = 300,000 7,500 3 Award Plus makes regular medals in batch sizes of 50. To produce 6,500 medals requires 130 (6,500 ? 50) batches. Accepting the special order will result in a decrease in operating income of $15,000 ($37,500 – $22,500).The special order should, therefore, be rejected. A more direct approach would be to focus on the incremental effects––the benefits of accepting the special order of 2,500 units versus the costs of selling 1,000 fewer units to regular customers. Increase in operating income from the 2,500-unit special order equals $50,000 (requirement 1). The l oss in operating income from selling 1,000 fewer units to regular customers equals: Lost revenue, $150 ? 1,000 Savings in direct materials costs, $35 ? 1,000 Savings in direct manufacturing labor costs, $40 ? 1,000 Savings in batch manufacturing costs, $500 ? 0 Operating income lost $(150,000) 35,000 40,000 10,000 $ (65,000) Accepting the special order will result in a decrease in operating income of $15,000 ($50,000 – $65,000). The special order should, therefore, be rejected. 3. Award Plus should not accept the special order. Increase in operating income by selling 2,500 units under the special order (requirement 1) Operating income lost from existing customers ($10 ? 7,500) Net effect on operating income of accepting special order The special order should, therefore, be rejected. $ 50,000 (75,000) $(25,000) 11-6 11-20 (30 min. ) Make versus buy, activity-based costing. . The expected manufacturing cost per unit of CMCBs in 2004 is as follows: Total Manufacturing Manufactur ing Costs of CMCB Cost per Unit (1) (2) = (1) ? 10,000 $1,700,000 $170 450,000 45 120,000 12 320,000 800,000 $3,390,000 32 80 $339 Direct materials, $170 ? 10,000 Direct manufacturing labor, $45 ? 10,000 Variable batch manufacturing costs, $1,500 ? 80 Fixed manufacturing costs Avoidable fixed manufacturing costs Unavoidable fixed manufacturing costs Total manufacturing costs 2. The following table identifies the incremental costs in 2004 if Svenson (a) made CMCBs and (b) purchased CMCBs from Minton.Total Incremental Costs Make Buy $ 3,000,000 $1,700,000 450,000 120,000 320,000 $2,590,000 $3,000,000 $410,000 Per-Unit Incremental Costs Make Buy $300 $170 45 12 32 $259 $300 $41 Incremental Items Cost of purchasing CMCBs from Minton Direct materials Direct manufacturing labor Variable batch manufacturing costs Avoidable fixed manufacturing costs Total incremental costs Difference in favor of making Note that the opportunity cost of using capacity to make CMCBs is zero since Svenson woul d keep this capacity idle if it purchases CMCBs from Minton.Svenson should continue to manufacture the CMCBs internally since the incremental costs to manufacture are $259 per unit compared to the $300 per unit that Minton has quoted. Note that the unavoidable fixed manufacturing costs of $800,000 ($80 per unit) will continue to be incurred whether Svenson makes or buys CMCBs. These are not incremental costs under either the make or the buy alternative and are, hence, irrelevant. 3. Svenson should continue to make CMCBs. The simplest way to analyze this problem is to recognize that Svenson would prefer to keep any excess capacity idle rather than use it to make CB3s. Why?Because expected incremental future revenues from CB3s, $2,000,000 are less than expected incremental future costs, $2,150,000. If Svenson keeps its capacity idle, we know from requirement 2 that it should make CMCBs rather than buy them. 11-7 11-20 (Cont’d. ) An important point to note is that, because Svens on forgoes no contribution by not being able to make and sell CB3s, the opportunity cost of using its facilities to make CMCBs is zero. It is, therefore, not forgoing any profits by using the capacity to manufacture CMCBs. If it does not manufacture CMCBs, rather than lose money on CB3s, Svenson will keep capacity idle.A longer and more detailed approach is to use the total alternatives or opportunity cost analyses shown in Exhibit 11-7 of the chapter. Choices for Svenson Make CMCBs Buy CMCBs Buy CMCBs and Do Not and Do Not and Make Relevant Items Make CB3s Make CB3s CB3s TOTAL-ALTERNATIVES APPROACH TO MAKE-OR-BUY DECISIONS Total incremental costs of making/buying CMCBs (from requirement 2) Excess of future costs over future revenues from CB3s Total relevant costs $2,590,000 0 $2,590,000 $3,000,000 0 $3,000,000 $3,000,000 150,000 $3,150,000 Svenson will minimize manufacturing costs by making CMCBs.OPPORTUNITY-COST APPROACH TO MAKE-OR-BUY DECISIONS Total incremental costs of making/b uying CMCBs (from requirement 2) $2,590,000 $3,000,000 Opportunity cost: profit contribution forgone because capacity will not be used to make CB3s 0* 0* Total relevant costs $2,590,000 $3,000,000 $3,000,000 0 $3,000,000 *Opportunity cost is 0 because Svenson does not give up anything by not making CB3s. Svenson is best off leaving the capacity idle (rather than manufacturing and selling CB3s). 11-8 11-21 (10 min. ) Inventory decision, opportunity costs. 1. Unit cost, orders of 20,000 Unit cost, order of 240,000 (0. 5 ? $8. 00) Alternatives under consideration: (a) Buy 240,000 units at start of year. (b) Buy 20,000 units at start of each month. Average investment in inventory: (a) (240,000 ? $7. 60) ? 2 (b) ( 20,000 ? $8. 00) ? 2 Difference in average investment $8. 00 $7. 60 $912,000 80,000 $832,000 Opportunity cost of interest forgone from 240,000-unit purchase at start of year = $832,000 ? 0. 08 = $66,560 2. No. The $66,560 is an opportunity cost rather than an incremental or out lay cost. No actual transaction records the $66,560 as an entry in the accounting system. 3.The following table presents the two alternatives: Alternative A: Alternative B: Purchase Purchase 240,000 20,000 spark plugs at spark plugs beginning of at beginning year of each month Difference (1) (2) (3 )= (1) – (2) Annual purchase-order costs (1 ? $200; 12 ? $200) Annual purchase (incremental) costs (240,000 ? $7. 60; 240,000 ? $8) Annual interest income that could be earned if investment in inventory were invested (opportunity cost) (8% ? $912,000; 8% ? $80,000) Relevant costs $ 200 1,824,000 $ 2,400 1,920,000 $ (2,200) (96,000) 72,960 $1,897,160 6,400 $1,928,800 66,560 $ (31,640)Column (3) indicates that purchasing 240,000 spark plugs at the beginning of the year is preferred relative to purchasing 20,000 spark plugs at the beginning of each month because the lower purchase cost exceeds the opportunity cost of holding larger inventory. If other incremental benefits of holding l ower inventory such as lower insurance, materials handling, storage, obsolescence, and breakage costs were considered, the costs under Alternative A would have been higher, and Alternative B may have been preferred. 11-9 11-22 (20–25 min. ) Relevant costs, contribution margin, product emphasis. 1. Cola $18. 0 13. 50 $ 4. 50 Lemonade $19. 20 15. 20 $ 4. 00 Punch $26. 40 20. 10 $ 6. 30 Natural Orange Juice $38. 40 30. 20 $ 8. 20 Selling price Deduct variable cost per case Contribution margin per case 2. The argument fails to recognize that shelf space is the constraining factor. There are only 12 feet of front shelf space to be devoted to drinks. Sexton should aim to get the highest daily contribution margin per foot of front shelf space: Natural Orange Juice $ 8. 20 ? 5 Contribution margin per case Sales (number of cases) per foot of shelf space per day Daily contribution per foot of front shelf space 3.Cola $ 4. 50 ? 25 Lemonade $ 4. 00 ? 24 Punch $ 6. 30 ? 4 $112. 50 $96. 00 $25. 20 $41. 00 The allocation that maximizes the daily contribution from soft drink sales is: Daily Contribution per Foot of Front Shelf Space $112. 50 96. 00 41. 00 25. 20 Cola Lemonade Natural Orange Juice Punch Feet of Shelf Space 6 4 1 1 Total Contribution Margin per Day $ 675. 00 384. 00 41. 00 25. 20 $1,125. 20 The maximum of six feet of front shelf space will be devoted to Cola because it has the highest contribution margin per unit of the constraining factor.Four feet of front shelf space will be devoted to Lemonade, which has the second highest contribution margin per unit of the constraining factor. No more shelf space can be devoted to Lemonade since each of the remaining two products, Natural Orange Juice and Punch (that have the second lowest and lowest contribution margins per unit of the constraining factor) must each be given at least one foot of front shelf space. 11-10 11-23 (10 min. ) Selection of most profitable product. Only Model 14 should be produced. The ke y to this problem is the relationship of manufacturing overhead to each product.Note that it takes twice as long to produce Model 9; machine-hours for Model 9 are twice that for Model 14. Management should choose the product mix that maximizes operating income for a given production capacity (the scarce resource in this situation). In this case, Model 14 will yield a $9. 50 contribution to fixed costs per machine hour, and Model 9 will yield $9. 00: Model 9 Selling price Variable costs per unit Contribution margin per unit Relative use of machine-hours per unit of product Contribution margin per machine hour $100. 00 82. 00 $ 18. 00 ? 2 $ 9. 00 Model 14 $70. 00 60. 50 $ 9. 50 ? $ 9. 50 11-23 Excel Application Decision-Making and Relevant Information Body-Builders, Inc. Original Data Selling Price Costs Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Marketing costs (all variable) Total costs Operating Income Model 9 $100. 00 2 8. 00 15. 00 25. 00 10. 00 14. 00 92. 00 $8. 00 $70. 00 13. 00 25. 00 12. 50 5. 00 10. 00 65. 50 $4. 50 Product Mix Analysis Selling price Variable cost per unit Contribution margin per unit Relative use of machine-hours per unit of product Contribution margin per machine-hour Model 9 $100 82. 0 18. 00 2 $9. 00 Model 14 $70 60. 50 9. 50 1 $9. 50 11-11 11-24 (20 min. ) Which base to close, relevant-cost analysis, opportunity costs. The future outlay operating costs will be $400 million regardless of which base is closed, given the additional $100 million in costs at Everett if Alameda is closed. Further, one of the bases will permanently remain open while the other will be shut down. The only relevant revenue and cost comparisons are: a. $500 million from sale of the Alameda base. Note that the historical cost of building the Alameda base ($100 million) is irrelevant.Note, also, that future increases in the value of the land at the Alameda base is also irrelevant. One of the bases mu st be kept open, so if it is decided to keep the Alameda base open, the Defense Department will not be able to sell this land at a future date. b. $60 million in savings in fixed income note if the Everett base is closed. Again, the historical cost of building the Everett base ($150 million) is irrelevant. The relevant costs and benefits analysis favors closing the Alameda base despite the objections raised by the California delegation in Congress. The net benefit equals $440 ($500 – $60) million. 11-25 (25? 0 min. ) Closing and opening stores. 1. Solution Exhibit 11-25, Column 1, presents the relevant loss in revenues and the relevant savings in costs from closing the Rhode Island store. Lopez is correct that Sanchez Corporation’s operating income would increase by $7,000 if it closes down the Rhode Island store. Closing down the Rhode Island store results in a loss of revenues of $860,000 but cost savings of $867,000 (from cost of goods sold, rent, labor, utilities, and corporate costs). Note that by closing down the Rhode Island store, Sanchez Corporation will save none of the equipment-related costs because this is a past cost.Also note that the relevant corporate overhead costs are the actual corporate overhead costs $44,000 that Sanchez expects to save by closing the Rhode Island store. The corporate overhead of $40,000 allocated to the Rhode Island store is irrelevant to the analysis. 2. Solution Exhibit 11-25, Column 2, presents the relevant revenues and relevant costs of opening another store like the Rhode Island store. Lopez is correct that opening such a store would increase Sanchez Corporation’s operating income by $11,000.Incremental revenues of $860,000 exceed the incremental costs of $849,000 (from higher cost of goods sold, rent, labor, utilities, and some additional corporate costs). Note that the cost of equipment written off as depreciation is relevant because it is an expected future cost that Sanchez will incur only i f it opens the new store. Also note that the relevant corporate overhead costs are the $4,000 of actual corporate overhead costs that Sanchez expects to incur as a result of opening the new store. Sanchez may, in fact, allocate more than $4,000 of corporate overhead to the new store but this allocation is irrelevant to the analysis. 1-12 11-25 (Cont’d. ) The key reason that Sanchez’s operating income increases either if it closes down the Rhode Island store or if it opens another store like it is the behavior of corporate overhead costs. By closing down the Rhode Island store, Sanchez can significantly reduce corporate overhead costs presumably by reducing the corporate staff that oversees the Rhode Island operation. On the other hand, adding another store like Rhode Island does not increase actual corporate costs by much, presumably because the existing corporate staff will be able to oversee the new store as well.SOLUTION EXHIBIT 11-25 Relevant-Revenue and Relevant-C ost Analysis of Closing Rhode Island Store and Opening Another Store Like It. Incremental (Loss in Revenues) Revenues and and Savings in (Incremental Costs) Costs from of Opening New Closing Rhode Store Like Rhode Island Store Island Store (1) (2) Revenues Cost of goods sold Lease rent Labor costs Depreciation of equipment Utilities (electricity, heating) Corporate overhead costs Total costs Effect on operating income (loss) $(860,000) 660,000 75,000 42,000 0 46,000 44,000 867,000 $ 7,000 $ 860,000 (660,000) (75,000) (42,000) (22,000) (46,000) (4,000) (849,000) $ 11,000 1-13 11-26 (20 min. ) Choosing customers. If Broadway accepts the additional business from Kelly, it would take an additional 500 machine-hours. If Broadway accepts all of Kelly’s and Taylor’s business for February, it would require 2,500 machine-hours (1,500 hours for Taylor and 1,000 hours for Kelly). Broadway has only 2,000 hours of machine capacity. It must, therefore, choose how much of the Taylor or Kelly business to accept. To maximize operating income, Broadway should maximize contribution margin per unit of the constrained resource. Fixed costs will remain unchanged at $100,000 regardless of the business Broadway chooses to accept in February, and is, therefore, irrelevant. ) The contribution margin per unit of the constrained resource for each customer in January is: Taylor Corporation $78,000 = $52 1,500 Kelly Corporation $32,000 = $64 500 Contribution margin per machine-hour Since the $80,000 of additional Kelly business in February is identical to jobs done in January, it will also have a contribution margin of $64 per machine-hour, which is greater than the contribution margin of $52 per machine-hour from Taylor.To maximize operating income, Broadway should first allocate all the capacity needed to take the Kelly Corporation business (1,000 machine-hours) and then allocate the remaining 1,000 (2,000 – 1,000) machine-hours to Taylor. Taylor Corporation $52 ? 1, 000 $52,000 Kelly Corporation $64 ? 1,000 $64,000 Total Contribution margin per machine-hour Machine-hours to be worked Contribution margin Fixed costs Operating income $116,000 100,000 $ 16,000 11-14 11-27 (30–40 min. ) Relevance of equipment costs. 1a. Statements of Cash Receipts and Disbursements Keep Year 2, 3, 4 $150,000 (110,000) (15,000)Year 1 Receipts from operations: Revenues Deduct disbursements: Other operating costs Operation of machine Purchase of â€Å"old† machine Purchase of â€Å"new† equipment Cash inflow from sale of old equipment Net cash inflow $150,000 (110,000) ( 15,000) (20,000)* Four Years Together $600,000 (440,000) (60,000) (20,000) Buy New Machine Four Year Years Year 1 2, 3, 4 Together $150,000 (110,000) (9,000) (20,000) (24,000) 8,000 $ (5,000) $150,000 (110,000) (9,000) $600,000 (440,000) (36,000) (20,000) (24,000) 8,000 $ 88,000 $ 5,000 $ 25,000 80,000 $ 31,000 *Some students ignore this item because it is the same for each altern ative. However, note that a statement for the entire year has been requested. Obviously, the $20,000 would affect Year 1 only under both the â€Å"keep† and â€Å"buy† alternatives. The difference is $8,000 for four years taken together. In particular, note that the $20,000 book value can be omitted from the comparison. Merely cross out the entire line; although the column totals are affected, the net difference is still $8,000. 11-15 11-27 (Cont’d. ) 1b.Again, the difference is $8,000: Income Statements Keep Year 1, 2, 3, 4 Revenues Costs (excluding disposal): Other operating costs Depreciation Operating costs of machine Total costs (excluding disposal) Loss on disposal: Book value (â€Å"cost†) Proceeds (â€Å"revenue†) Loss on disposal Total costs Operating income $150,000 110,000 5,000 15,000 130,000 Four Years Together $600,000 440,000 20,000 60,000 520,000 Buy New Machine Four Years Year Together Year 1 2, 3, 4 $150,000 $150,000 110,000 6,000 9,000 125,000 110,000 6,000 9,000 125,000 $600,000 440,000 24,000 36,000 500,000 20,000* (8,000) 12,000 512,000 $ 88,000 30,000 $ 20,000 520,000 $ 80,000 20,000 (8,000) 12,000 137,000 125,000 $ 13,000 $ 25,000 *As in part (1), the $20,000 book value may be omitted from the comparison without changing the $8,000 difference. This adjustment would mean excluding the depreciation item of $5,000 per year (a cumulative effect of $20,000) under the â€Å"keep† alternative and excluding the book value item of $20,000 in the loss on disposal computation under the â€Å"buy† alternative. 1c. The $20,000 purchase cost of the old equipment, the revenues, and the other costs are irrelevant because their amounts are common to both alternatives. 2.The net difference would be unaffected. Any number may be substituted for the original $20,000 figure without changing the final answer. Of course, the net cash outflows under both alternatives would be high. The Auto Wash manager really b lundered. However, keeping the old equipment will increase the cost of the blunder to the cumulative tune of $8,000 over the next four years. 3. Book value is irrelevant in decisions about the replacement of equipment, because it is a past (historical) cost. All past costs are down the drain. Nothing can change what has already been spent or what has already happened. The $20,000 has been spent.How it is subsequently accounted for is irrelevant. The analysis in requirement (1) clearly shows that we may completely ignore the $20,000 and still have a correct analysis. The only relevant items are those expected future items that will differ among alternatives. 11-16 11-27 (Cont’d. ) Despite the economic analysis shown here, many managers would keep the old machine rather than replace it. Why? Because, in many organizations, the income statements of part (2) would be a principal means of evaluating performance. Note that the first-year operating income would be higher under the à ¢â‚¬Å"keep† alternative.The conventional accrual accounting model might motivate managers toward maximizing their first-year reported operating income at the expense of long-run cumulative betterment for the organization as a whole. This criticism is often made of the accrual accounting model. That is, the action favored by the â€Å"correct† or â€Å"best† economic decision model may not be taken because the performance-evaluation model is either inconsistent with the decision model or because the focus is on only the short-run part of the performance-evaluation model. There is yet another potential conflict etween the decision model and the performance evaluation model. Replacing the machine so soon after it is purchased may reflect badly on the manager’s capabilities and performance. Why didn’t the manager search and find the new machine before buying the old machine? Replacing the old machine one day later at a loss may make the manager appear i ncompetent to his or her superiors. If the manager’s bosses have no knowledge of the better machine, the manager may prefer to keep the existing machine rather than alert his or her bosses about the better machine. 11-28 (30 min. Equipment upgrade versus replacement (A. Spero, adapted). 1. Solution Exhibit 11-28 presents a cost comparison of the upgrade and replacement alternatives for the three years taken together. It indicates that Pacifica Corporation should replace the production line because it is better off by $180,000 by replacing rather than upgrading. SOLUTION EXHIBIT 11-28 Comparing Upgrade and Replace Alternatives Three Years Together Upgrade Replace Difference (1) (2) (3) = (1) – (2) $2,160,000 $1,620,000 $ 540,000 (90,000) 90,000 300,000 $2,460,000 750,000 $2,280,000 (450,000) $ 180,000 Cash-operating costs, $12; $9 ? 80,000 Current disposal price One-time capital costs, written off periodically as depreciation Total relevant costs Note that sales and boo k value of the existing machine are the same under both alternatives and, hence, are irrelevant. 11-17 11-28 (Cont’d. ) 2a. Suppose the capital expenditure to replace the production line is $X. Using data from Solution Exhibit 11-28, the cost of replacing the production line is equal to $1,620,000 – $90,000 + $X. Using data from Solution Exhibit 11-28, the cost of upgrading the production line is equal to $2,160,000 + $300,000 = $2,460,000.We want to find $X such that $1,620,000 – $90,000 + $X = $2,460,000 that is, $1,530,000 + $X = $2,460,000 that is, $X = $2,460,000 – $1,530,000 or $X = $ 930,000 Pacifica would prefer replacing, rather than upgrading, the existing line if the replacement cost of the new line does not exceed $930,000. Note that the $930,000 can also be obtained by adding the $180,000 calculated in requirement 1 to the replacement cost of $750,000 for the new machine assumed in requirement 1 ($750,000 + $180,000 = $930,000). 2b. Suppose t he units produced and sold each year equal y.Using data from Solution Exhibit 11-28, the cost of replacing the production line is $9y – $90,000 + $750,000, while the cost of upgrading is $12y + $300,000. We solve for the y at which the two costs are the same. $9y – $90,000 + $750,000 $9y + $660,000 $3y y = = = = $12y + $300,000 $12y + $300,000 $360,000 120,000 units For expected production and sales of less than 120,000 units over 3 years (40,000 units per year), the upgrade alternative is cheaper. When production and sales are low, the higher operating costs of upgrading are more than offset by the significant savings in capital costs when upgrading relative to replacing.For expected production and sales exceeding 120,000 units over 3 years, the replace alternative is cheaper. For high output, the benefits of the lower operating costs of replacing, relative to upgrading, exceed the higher capital costs. 3. Operating income for the first year under the upgrade and repl ace alternatives are as follows: Upgrade Replace Revenues $25 ? 60,000 $1,500,000 $1,500,000 Cash-operating costs $12 ? 60,000, $9 ? 60,000 720,000 540,000 a b Depreciation 220,000 250,000 c Loss on disposal of old production line –– 270,000 Total costs 940,000 1,060,000 Operating income $ 560,000 $ 440,000 a $360,000 + $300,000) ? 3 = $220,000 $750,000 ? 3 = $250,000 c Book value – current disposal price = $360,000 – $90,000 = $270,000 b First-year operating income is higher by $120,000 under the upgrade alternative. If first year's operating income is an important component of Azinger's bonus, he would prefer the upgrade over the replace alternative even though the decision model (in requirement 1) prefers the replace to the upgrade alternative. This exercise illustrates the conflict between the decision model and the performance evaluation model. 11-18 11-29 (30 min. Contribution approach, relevant costs. 1. Average one-way fare per passenger Commissio n at 8% of $500 Net cash to Air Frisco per ticket Average number of passengers per flight Revenues per flight ($460 ? 200) Food and beverage cost per flight ($20 ? 200) Total contribution margin from passengers per flight 2. If fare is Commission at 8% of $480 Net cash per ticket Food and beverage cost per ticket Contribution margin per passenger Total contribution margin from passengers per flight ($421. 60 ? 212) All other costs are irrelevant. $ 500 40 $ 460 ? 200 $92,000 4,000 $88,000 $480. 0 38. 40 441. 60 20. 00 $421. 60 $89,379. 20 On the basis of quantitative factors alone, Air Frisco should decrease its fare to $480 because reducing the fare gives Air Frisco a higher contribution margin from passengers ($89,379. 20 versus $88,000). 3. In evaluating whether Air Frisco should charter its plane to Travel International, we compare the charter alternative to the solution in requirement 2 because requirement 2 is preferred to requirement 1. Under requirement 2, contribution from passengers Deduct fuel costs Total contribution per flight $89,379. 0 14,000. 00 $75,379. 20 Air Frisco gets $74,500 per flight from chartering the plane to Travel International. On the basis of quantitative financial factors, Air Frisco is better off not chartering the plane and, instead, lowering its own fares. Other qualitative factors that Air Frisco should consider in coming to a decision are: a. The lower risk from chartering its plane relative to the uncertainties regarding the number of passengers it might get on its scheduled flights. b. The stability of the relationship between Air Frisco and Travel International.If this is not a long-term arrangement, Air Frisco may lose current market share and not benefit from sustained charter revenues. 11-19 11-30 (30 min. ) Relevant costs, opportunity costs. 1. Easyspread 2. 0 has a higher relevant operating income than Easyspread 1. 0. Based on this analysis, Easyspread 2. 0 should be introduced immediately: Easyspread 1. 0 $150 $ 0 0 $150 Easyspread 2. 0 $185 $25 25 $160 Relevant revenues Relevant costs: Manuals, diskettes, compact discs Total relevant costs Relevant operating income Reasons for other cost items being irrelevant are: Easyspread 1. †¢ Manuals, diskettes—already incurred †¢ Development costs—already incurred †¢ Marketing and administrative—fixed costs of period Easyspread 2. 0 †¢ Development costs—already incurred †¢ Marketing and administration—fixed costs of period Note that total marketing and administration costs will not change whether Easyspread 2. 0 is introduced on July 1, 2003, or on October 1, 2003. 2. Other factors to be considered: a. Customer satisfaction. If 2. 0 is significantly better than 1. 0 for its customers, a customer driven organization would immediately introduce it unless other factors offset this bias towards â€Å"do what is best for the customer. b. Quality level of Easyspread 2. 0. It is critical for new s oftware products to be fully debugged. Easyspread 2. 0 must be error-free. Consider an immediate release only if 2. 0 passes all quality tests and can be fully supported by the salesforce. c. Importance of being perceived to be a market leader. Being first in the market with a new product can give Basil Software a â€Å"first-mover advantage,† e. g. , capturing an initial large share of the market that, in itself, causes future potential customers to lean towards purchasing Easyspread 2. 0. Moreover, by introducing 2. earlier, Basil can get quick feedback from users about ways to further refine the software while its competitors are still working on their own first versions. Moreover, by locking in early customers, Basil may increase the likelihood of these customers also buying future upgrades of Easyspread 2. 0. d. Morale of developers. These are key people at Basil Software. Delaying introduction of a new product can hurt their morale, especially if a competitor then preem pts Basil from being viewed as a market leader. 11-20 11-31 (20 min. ) Opportunity costs (H. Schaefer). 1.The opportunity cost to Wolverine of producing the 2,000 units of Orangebo is the contribution margin lost on the 2,000 units of Rosebo that would have to be forgone, as computed below: Selling price Variable costs per unit: Direct materials Direct manufacturing labor Variable manufacturing overhead Variable marketing costs Contribution margin per unit Contribution margin for 2,000 units $20 $2 3 2 4 11 $ 9 $ 18,000 The opportunity cost is $18,000. Opportunity cost is the maximum contribution to operating income that is forgone (rejected) by not using a limited resource in its next-best alternative use. . Contribution margin from manufacturing 2,000 units of Orangebo and purchasing 2,000 units of Rosebo from Buckeye is $16,000, as follows: Manufacture Orangebo Selling price Variable costs per unit: Purchase costs Direct materials Direct manufacturing labor Variable manufacturing costs Variable marketing overhead Variable costs per unit Contribution margin per unit Contribution margin from selling 2,000 units of Orangebo and 2,000 units of Rosebo $15 – 2 3 2 2 9 $ 6 $12,000 Purchase Rosebo $20 14 Total 4 18 $ 2 $4,000 $16,000As calculated in requirement 1, Wolverine's contribution margin from continuing to manufacture 2,000 units of Rosebo is $18,000. Accepting the Miami Company and Buckeye offer will cost Wolverine $2,000 ($16,000 – $18,000). Hence, Wolverine should refuse the Miami Company and Buckeye Corporation's offers. 3. The minimum price would be $9, the sum of the incremental costs as computed in requirement 2. This follows because, if Wolverine has surplus capacity, the opportunity cost = $0. For the short-run decision of whether to accept Orangebo's offer, fixed costs of Wolverine are irrelevant.Only the incremental costs need to be covered for it to be worthwhile for Wolverine to accept the Orangebo offer. 11-21 11-32 (30-40 min. ) Product mix, relevant costs (N. Melumad, adapted). 1. Selling price Variable manufacturing cost per unit Variable marketing cost per unit Total variable costs per unit Contribution margin per unit Contributi on margin per hour of the constraine d resource (the regular machine) Total contribution margin from selling only R3 or only HP6 R3: $25 ? 50,000; HP6: $30 ? 0,000 Less Lease costs of high-precision machine to produce and sell HP6 Net relevant benefit R3 $100 60 15 75 $ 25 $25 = $25 1 HP6 $150 100 35 135 $ 15 $15 = $30 0. 5 $1,250,000 ? $1,250,000 $1,500,000 300,000 $1,200,000 Even though HP6 has the higher contribution margin per unit of the constrained resource, the fact that Pendleton must incur additional costs of $300,000 to achieve this higher contribution margin means that Pendleton is better off using its entire 50,000-hour capacity on the regular machine to produce and sell 50,000 units (50,000 hours ? 1 hour per unit) of R3.The additional contribution from selling HP6 rather than R3 is $250,000 ($1,500,000 ? $1,250,000), which is not enough to cover the additional costs of leasing the high-precision machine. Note that, because all other overhead costs are fixed and cannot be changed, they are irrelevant for the decision. 2. If capacity of the regular machines is increased by 15,000 machine-hours to 65,000 machine-hours (50,000 originally + 15,000 new), the net relevant benefit from producing R3 and HP6 is as follows: R3 Total contribution margin from selling only R3 or only HP6 R3: $25 ? 5,000; HP6: $30 ? 65,000 Less Lease costs of high-precision machine that would be incurred if HP6 is produced and sold Less Cost of increasing capacity by 15,000 hours on regular machine Net relevant benefit HP6 $1,625,000 $1,950,000 300,000 150,000 150,000 $1,475,000 $1,500,000 11-22 11-32 (Cont’d. ) Investing in the additional capacity increases Pendleton’s operating income by $250,000 ($1,500,000 calculated in requirement 2 minus $1,250,000 calc ulated in requirement 1), so Pendleton should add 15,000 hours to the regular machine.With the extra capacity available to it, Pendleton should use its entire capacity to produce HP6. Using all 65,000 hours of capacity to produce HP6 rather than to produce R3 generates additional contribution margin of $325,000 ($1,950,000 ? $1,625,000) which is more than the additional cost of $300,000 to lease the highprecision machine. Pendleton should therefore produce and sell 130,000 units of HP6 (65,000 hours ? 0. 5 hours per unit of HP6) and zero units of R3. 3.R3 Selling price Variable manufacturing costs per unit Variable marketing costs per unit Total variable costs per unit Contribution margin per unit Contributi on margin per hour of the constraine d resource (the regular machine) $100 60 15 75 $ 25 $25 = $25 1 HP6 $150 100 35 135 $ 15 S3 $120 70 15 85 $ 35 $15 $35 = $30 = $35 0 . 5 1 The first step is to compare the operating profits that Pendleton could earn if it accepted the Carter Corporation offer for 20,000 units with the operating profits Pendleton is currently earning.S3 has the highest contribution margin per hour on the regular machine and requires no additional investment such as leasing a high-precision machine. To produce the 20,000 units of S3 requested by Carter Corporation, Pendleton would require 20,000 hours on the regular machine resulting in contribution margin of $35 ? 20,000 = $700,000. Pendleton now has 45,000 hours available on the regular machine to produce R3 or HP6. R3 Total contribution margin from selling only R3 or only HP6 R3: $25 ? 45,000; HP6: $30 ? 45,000 Less Lease osts of high-precision machine to produce and sell HP 6 Net relevant benefit HP6 $1,125,000 $1,350,000 ? 300,000 $1,125,000 $1,050,000 Pendleton should use all the 45,000 hours of available capacity to produce 45,000 units of R3. Thus, the product mix that maximizes operating income is 20,000 units of S3, 45,000 units of R3, and zero units of HP6. This optimal mix res ults in a contribution margin of $1,825,000 ($700,000 from S3 and $1,125,000 from R3). Relative to requirement 2, operating income increases by $325,000 ($1,825,000 minus $1,500,000 calculated in requirement 2).Hence, Pendleton should accept the Carter Corporation business and supply 20,000 units of S3. 11-23 11-33 (35–40 min. ) Discontinuing a product line, selling more units. 1. The incremental revenue losses and incremental savings in cost by discontinuing the Tables product line follows: Difference: Incremental (Loss in Revenues) and Savings in Costs from Dropping Tables Line Revenues Direct materials and direct manufacturing labor Depreciation on equipment Marketing and distribution General administration Corporate office costs Total costs Operating income (loss) $(500,000) 300,000 0 70,000 0 0 370,000 $(130,000)Dropping the Tables product line results in revenue losses of $500,000 and cost savings of $370,000. Hence, Grossman Corporation’s operating income will b e $130,000 higher if it does not drop the Tables line. Note that, by dropping the Tables product line, Home Furnishings will save none of the depreciation on equipment, general administration costs, and corporate office costs, but it will save variable manufacturing costs and all marketing and distribution costs on the Tables product line. . Grossman’s will generate incremental operating income of $128,000 from selling 4,000 additional tables and, hence, should try to increase table sales. The calculations follow: Incremental Revenues (Costs) and Operating Income $500,000 (300,000) (42,000)* (30,000)†  0** 0** $128,000 Revenues Direct materials and direct manufacturing labor Cost of equipment written off as depreciation Marketing and distribution costs General administration costs Corporate office costs Operating income Note that the additional costs of equipment are relevant future costs for the â€Å"selling more tables decision† because they represent increment al future costs that differ between the alternatives of selling and not selling additional tables. † Current marketing and distribution costs which varies with number of shipments = $70,000 – $40,000 = $30,000. As the sales of tables double, the number of shipments will double, resulting in incremental marketing and distribution costs of (2 ? $30,000) – $30,000 = $30,000. *General administration and corporate office costs will be unaffected if Grossman decides to sell more tables. Hence, these costs are irrelevant for the decision. 11-24 11-34 (30 min. ) Discontinuing or adding another division (continuation of 11-33). 1. Solution Exhibit 11-34, Column 1, presents the relevant loss of revenues and the relevant savings in costs from closing the Northern Division. As the calculations show, Grossman’s operating income would decrease by $140,000 if it shut down the Northern Division (loss in revenues of $1,500,000 versus savings in costs of $1,360,000).Grossman will save variable manufacturing costs, marketing and distribution costs, and division general administration costs by closing the Northern Division but equipment-related depreciation and corporate office allocations are irrelevant to the decision. Equipment-related costs are irrelevant because they are past costs (and the equipment has zero disposal price). Corporate office costs are irrelevant because Grossman will not save any actual corporate office costs by closing the Northern Division. The corporate office costs that used to be allocated to the Northern Division will be allocated to other divisions. . The manager at corporate headquarters responsible for making the decision is evaluated on Northern Division’s operating income after allocating corporate office costs. The manager will evaluate the options as follows: If the manager does not close the Northern Division in 2002, the division is expected to show an operating loss of $110,000 after allocating all corporate office costs. If the manager closes the Northern Division, the division would show an operating loss of $100,000 from the write off of equipment.It would show no revenues and, hence, would not attract any corporate office costs. It would also not incur any manufacturing, marketing and distribution, and general administration costs. From the viewpoint of maximizing the operating income against which the manager is evaluated, the manager would prefer to shut down Northern Division (and show an operating loss of $100,000 instead of an operating loss of $110,000 by operating it). In fact, the manager might argue that even the $100,000 operating loss is more a consequence of accounting write offs rather than a â€Å"real† operating loss.Recall from requirement 1 that the decision model favored keeping the Northern Division open. The performance evaluation model of the manager making the decision suggests that the Northern Division be closed. Hence, the performance evaluation model is inconsistent with the decision model. 3. Solution Exhibit 11-34, Column 2, presents the relevant revenues and relevant costs of opening the Southern Division (a division whose revenues and costs are expected to be identical to the revenues and costs of the Northern Division).Grossman should open the Southern Division because it would increase operating income by $40,000 (increase in relevant revenues of $1,500,000 and increase in relevant costs of $1,460,000). The relevant costs include direct materials, direct manufacturing labor, marketing and distribution, equipment, and division general administration costs but not corporate office costs. Note, in particular, that the cost of equipment written off as depreciation is relevant because it is an expected future cost that Grossman will incur only if it opens the Southern Division.Corporate office costs are irrelevant because actual corporate office costs will not change if Grossman opens the Southern Division. The current corpora te staff will be able to oversee the Southern Division’s operations. Grossman will allocate some corporate office costs to the Southern Division but this allocation represents corporate office costs that are already currently being allocated to some other division. Because actual total corporate office costs do not change, they are irrelevant to the division. 1-25 11-34 (Cont’d. ) SOLUTION EXHIBIT 11-34 Relevant-Revenue and Relevant-Cost Analysis for Closing Northern Division and Opening Southern Division Incremental (Loss in Revenues) Revenues and and Savings in (Incremental Costs) Costs from Closing from Opening Northern Division Southern Division (1) (2) $(1,500,000) $1,500,000 825,000 0 205,000 330,000 0 1,360,000 $ (140,000) (825,000) (100,000) (205,000) (330,000) 0 (1,460,000) $ 40,000Revenues Variable direct materials and direct manufacturing labor costs Equipment cost written off as depreciation Marketing and distribution costs Division general administration c osts Corporate office costs Total costs Effect on operating income (loss) 11-35 (30–40 min. ) Make or buy, unknown level of volume (A. Atkinson). 1. Let X = 1 starter assembly. The variable costs required to manufacture 150,000X are: Direct materials Direct manufacturing labor Variable manufacturing overhead Total variable costs $200,000 150,000 100,000 $450,000 The variable costs per unit are $450,000 ? 150,000 = $3. 00 per unit. 11-26 11-35 (Cont’d. The data can be presented in both â€Å"all data† and â€Å"relevant data† formats: All Data Relevant Data Alternative Alternative Alternative Alternative 1: 2: 1: 2: Buy Make Buy Make Variable manufacturing costs $ 3X – $ 3X – Fixed general manufacturing overhead 150,000 $150,000 – – Fixed overhead, avoidable 100,000 – 100,000 – Division 2 manager's salary 40,000 50,000 40,000 $50,000 Division 3 manager's salary 50,000 – 50,000 – Purchase cost, if boug ht from Tidnish Electronics – 4X – 4X Total $340,000 $200,000 $190,000 $50,000 + $ 3X + $ 4X + $ 3X + $ 4X The number of units at which the costs of make and buy are equivalent is: All data analysis: or Relevant data analysis: $340,000 + $3X = $200,000 + $4X X = 140,000 $190,000 + $3X = $50,000 + $4X X = 140,000Assuming cost minimization is the objective, then: †¢ If production is expected to be less than 140,000 units, it is preferable to buy units from Tidnish. †¢ If production is expected to exceed 140,000 units, it is preferable to manufacture internally (make) the units. †¢ If production is expected to be 140,000 units, this is the indifference point between buying units from Tidnish and internally manufacturing (making) the units. 2. The information on the storage cost, which is avoidable if self-manufacture is discontinued, is relevant; these storage charges represent current outlays that are avoidable if self-manufacture is discontinued. Assume t hese $50,000 charges are represented as an opportunity cost of the make alternative.The costs of internal manufacture that incorporate this $50,000 opportunity cost are: All data analysis: Relevant data analysis: All data analysis: Relevant data analysis: $390,000 + $3X $240,000 + $3X $390,000 + $3X X $240,000 + $3X X = = = = $200,000 + $4X 190,000 $50,000 + $4X 190,000 The number of units at which the costs of make and buy are equivalent is: If production is expected to be less than 190,000, it is preferable to buy units from Tidnish. If production is expected to exceed 190,000, it is preferable to manufacture the units internally. 11-27 11-36 (30 min. ) Make versus buy, activity-based costing, opportunity costs (N. Melumad and S. Reichelstein, adapted). 1. Relevant costs under buy alternative: Purchases, 10,000 ? $8. 0 Relevant costs under make alternative: Direct materials Direct manufacturing labor Variable manufacturing overhead Inspection, setup, materials handling Machine ren t Total relevant costs under make alternative $82,000 $40,000 20,000 15,000 2,000 3,000 $80,000 The allocated fixed plant administration, taxes, and insurance will not change if Ace makes or buys the chains. Hence, these costs are irrelevant to the make-or-buy decision. The analysis indicates that Ace should not buy the chains from the outside supplier. 2. Relevant costs under the make alternative: Relevant costs (as computed in requirement 1) Relevant costs under the buy alternative: Costs of purchases (10,000 ? $8. 0) Additional fixed costs Additional contribution margin from using the space where the chains were made to upgrade the bicycles by adding mud flaps and reflector bars, 10,000 ? ($20 – $18) Total relevant costs under the buy alternative $80,000 $82,000 16,000 (20,000) $78,000 Ace should now buy the chains from an outside vendor and use its own capacity to upgrade its own bicycles. 3. In this requirement, the decision on mud flaps and reflectors is irrelevant to t he analysis. Cost of manufacturing chains: Variable costs, ($4 + $2 + $1. 50 = $7. 50) ? 6,200 Batch costs, $200/batcha ? 8 batches Machine rent Cost of buying chains, $8. 20 ? 6,200 a $46,500 1,600 3,000 $51,100 $50,840 $2,000 ? 10 batches In this case, Ace should buy the chains from the outside vendor. 11-28 11-37 (60 min. Multiple choice; comprehensive problem on relevant costs. You may wish to assign only some of the parts. Per Unit Fixed Manufacturing costs: Direct materials Direct manufacturing labor Variable manufac. indirect costs Fixed manufac. indirect costs Marketing costs: Variable Fixed Total $1. 00 1. 20 0. 80 0. 50 $1. 50 0. 90 Variable $3. 50 $0. 50 $3. 00 2. 40 $5. 90 0. 90 $1. 40 1. 50 $4. 50 1. (b) $3. 50 Manufacturing Costs Variable $3. 00 Fixed 0. 50 Total $3. 50 2. (e) None of the above. Decrease in operating income is $16,800. Differential $1,440,000+ $ 91,200* 720,000 + 360,000 + 1,080,000+ 360,000 – 120,000 216,000 336,000 $ 24,000 New Old Revenues 24 0,000 ? $6. 0 Variable costs Manufacturing 240,000 ? $3. 00 Marketing and other 240,000 ? $1. 50 Variable product costs Contribution margin Fixed costs: Manufacturing $0. 50 ? 20,000 ? 12 mos. = Marketing and other $0. 90 ? 240,000 Fixed product costs Operating income *Incremental revenue: $5. 80 ? 24,000 Deduct price reduction $0. 20 ? 240,000 264,000 ? $5. 80 792,000 396,000 1,188,000 343,200 120,000 216,000 $ 7,200 72,000264,000 ? $3. 00 36,000264,000 ? $1. 50 108,000 16,800 –– –– –– – $ 16,800 3 $139,200 48,000 $ 91,200 3. (c) $3,500 If this order were not landed, fixed manufacturing overhead would be underallocated by $2,500, $0. 50 per unit ? 5,000 units.Therefore, taking the order increases operating income by $1,000 plus $2,500, or $3,500. 11-29 11-37 (Cont’d. ) Another way to present the same idea follows: Revenues will increase by (5,000 ? $3. 50 = $17,500) + $1,000 Costs will increase by 5,000 ? $3. 00 Fixed overhead will not change Change in operating income $18,500 15,000 – $ 3,500 Note that this answer to (3) assumes that variable marketing costs are not influenced by this contract. These 5,000 units do not displace any regular sales. 4. (a) $4,000 less ($7,500 – $3,500) Government Contract As above $3,500 Regular Channels Sales, 5,000 ? $6. 00 Increase in costs: Variable costs only: Manufacturing, 5,000 ? $3. 0 $15,000 Marketing, 5,000 ? $1. 50 7,500 Fixed costs are not affected Change in operating income 5. (b) $4. 15 $30,000 22,500 $ 7,500 Differential costs: Variable: Manufacturing Shipping Fixed: $4,000 ? 10,000 $3. 00 0. 75 $3. 75 ? 10,000 0. 40 ? 10,000 4,000 $4. 15 ? 10,000 $41,500 $37,500 Selling price to break even is $4. 15 per unit. 6. (e) $1. 50, the variable marketing costs. The other costs are past costs, and are, therefore, irrelevant. None of these. The correct answer is $3. 55. This part always gives students trouble. The short-cut solution below is followed b y a longer solution that is helpful to students. 7. (e) 11-30 11-37 (Cont’d. Short-cut solution: The highest price to be paid would be measured by those costs that could be avoided by halting production and subcontracting: Variable manufacturing costs Fixed manufacturing costs saved $60,000 ? 240,000 Marketing costs (0. 20 ? $1. 50) Total costs Longer but clearer solution: Comparative Annual Income Statement Present Difference Proposed Revenues Variable costs: Manufacturing, 240,000 ? 3. 00 Marketing and other, 240,000 ? $1. 50 Variable costs Contribution margin Fixed costs: Manufacturing Marketing and other Total fixed costs Operating income $1,440,000 720,000 360,000 1,080,000 360,000 120,000 216,000 336,000 $ 24,000 $ – +132,000 – 72,000 $1,440,000 852,000* 288,000 1,140,000 300,000 60,000 216,000 276,000 $ 24,000 $3. 00 0. 25 0. 30 $3. 55 – 60,000 $ 0 This solution is obtained by filling in the above schedule with all the known figures and working â⠂¬Å"from the bottom up† and â€Å"from the top down† to the unknown purchase figure. Maximum variable costs that can be incurred, $1,140,000 – $288,000 = maximum purchase costs, or $852,000. Divide $852,000 by 240,000 units, which yields a maximum purchase price of $3. 55. 11-31 11-38 (15 min. ) Make or buy (continuation of 11-37). The maximum price Class Company should be willing to pay is $3. 9417 per unit. Expected unit production and sales of new product must be half of the old product (1/2 ? 240,000 = 120,000) because the fixed manufacturing overhead rate for the new product is twice that of the fixed manufacturing overhead rate for the old product.Proposed Make New Old Present Product Product Total Revenues $1,440,000 $1,080,000 $1,440,000 $2,520,000 Variable (or purchase) costs: Manufacturing 720,000 600,000 946,000* 1,546,000 Marketing and other 360,000 240,000 288,000 528,000 Total variable costs 1,080,000 840,000 1,234,000 2,074,000 Contribution margin 360,000 240,000 206,000 446,000 Fixed costs: Manufacturing 120,000 120,000 120,000 Marketing and other 216,000 60,000 216,000 276,000 Total fixed costs 336,000 180,000 216,000 396,000 Operating income $ 24,000 $ 60,000 $ (10,000) $ 50,000 *This is an example of opportunity costs, whereby subcontracting at a price well above the $3. 50 current manufacturing (absorption) cost is still desirable because the old product will be displaced in manufacturing by a new product that is more profitable.Because the new product promises an operating income of $60,000 (ignoring the irrelevant problems of how fixed marketing costs may be newly reallocated between products), the old product can sustain up to a $10,000 loss and still help accomplish management's overall objectives. Maximum costs that can be incurred on the old product are $1,440,000 plus the $10,000 loss, or $1,450,000. Maximum purchase cost: $1,450,000 – ($288,000 + $216,000) = $946,000. Maximum purchase cost per unit: $946,0 00 ? 240,000 units = $3. 9417 per unit. Alternative Computation Operating income is $9. 00 – $8. 50 = $0. 50 per unit for 120,000 new units Target operating income Maximum loss allowed on old product Maximum loss per unit allowed on old product, $10,000 ? 40,000 = Selling price of old product Allowance for loss Total costs allowed per unit Continuing costs for old product other than purchase cost: Fixed manufacturing costs––all transferred to new product Variable marketing costs Fixed marketing costs Maximum purchase cost per unit $60,000 50,000 $10,000 $0. 0417 $6. 0000 0. 0417 6. 0417 $ – 1. 20 0. 90 2. 1000 $3. 9417 11-32 11-39 (30 min. ) Appendix). 1. Optimal production plan, computer manufacturer (Chapter X = Units of printers Y = Units of desktop computers Objective: Maximize total contribution margin of $200X + $100Y Constraints: For production line 1: 6X + 4Y ? 24 For production line 2: 10X ? 0 Sales of X and Y: X – Y ? 0 Negative productio n impossible: X 0 ? Y ? 0 2. Solution Exhibit 11-39 presents a graphical summary of the relationships. The sales-mix constraint here is somewhat unusual. The X – Y ? 0 line is the one going upward at a 45-degree angle from the origin. The optimal corner is the point (2, 3), 2 printers and 3 computers. The corner point where the production line 1 and production line 2 constraints meet is X = 2, Y = 3 that can be calculated by solving: 6X + 4Y = 24 (1) Production line 1 constraint 10X = 20 (2) Production line 2 constraint From (2) X = 20 ? 10 = 2 Substituting for X in (1) 6 ? 2 + 4Y = 24 4Y = 24 – 12 = 12 Y = 12 ? = 3 The corner point where the production line 2 constraint and the product-mix constraint meet is X = 2, Y = 2 that can be calculated by solving: 10X = 20 (2) Production line 2 constraint X – Y = 0 (3) Product-mix constraint From (2) X = 20 ? 10 = 2 Substituting for X in (3) Y = 2 Using the trial-and-error method: Trial 1 2 3 4 Corner (X; Y) (0; 0) (2; 2) (2; 3) (0; 6) Total Contribution Margin $ 200(0) + $100(0) = $ 0 200(2) + 100(2) = 600 200(2) + 100(3) = 700 200(0) + 100(6) = 600 The optimal solution that maximizes operating income is 2 printers and 3 computers. 11-33 11-39 (Cont’d. ) SOLUTION EXHIBIT 11-39 Graphic Solution to Find Optimal Mix, Information Technology, Inc. Product Line 1 Constraint Product Y Production in Units 6 Product Line 2

HR Research Paper Example | Topics and Well Written Essays - 750 words

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Commanding officer Personal Statement Example | Topics and Well Written Essays - 1750 words

Commanding officer - Personal Statement Example As a commanding officer of the 103rd precinct, I am responsible for crime within the district. This 103rd precinct refers to a multi-cultural command around the area. The neighborhoods in these areas comprise of Hollis Park Gardens, downtown Jamaica Business District, Lakewood, Jamaica and Hollis. As a commanding officer of this area, I am responsible for all the crimes that take place within these neighborhoods. In addition, I also shoulder the responsibility of the quality of life within these societies, community affairs, and the level of crime within the community, which is at an all time high. As the new commanding officer of this 103rd precinct, have come up with a number of solid measures that will enable me to control the levels of crimes within these regions, as well as, ensure that the community is a safe and peaceful place to reside, with reigning peace and safety (Addington and Lynch 280). The level of crime within my precinct is very alarming to the extent that some old folks are contemplating moving out of the neighborhoods to safer regions. The region has a wide variety of crimes, which include felony assaults, auto theft and carjacking, burglaries and robberies, street mugging, and rape cases are very common in the area. In addition to these petty crimes, the region also has hardened gangsters who conduct daylight robbery, and fail to consider the quality of lives that they take away in the course of their theft or robbery escapades. All these criminal activities make the region an unsafe place to reside, as well as, a poor place for investments or any other business activity (Eterno and Silverman 66). My responsibilities as the commanding officer of this region are to reduce to a manageable level the rate of crime in the region, as well as, make the region conducive for both habitation and business investments purposes. The first way of reducing these crimes is to analyze the reason and cause behind each criminal activity. Research from crime s tats of the region provides that the main reason why the region has a high level of crime is the lack of proper policing activities in the region. The area has a low ratio of police to citizens. The recommended ratio of police to citizens in this region is three police officers for every VIP, and one police officer for every 750 commoners. However, the current statistics of police to the public provide two police officers for every VIP and one police officer for one thousand five hundred common citizens (Kalinich, Klofas and Stojkovic 45). I intend to increase these ratios of police to the public to the recommended levels. Having the right numbers of police patrolling the region will lead to a considerable reduction of crime in the region. Furthermore, the police we have in the region, the lesser the levels of crime as criminals will feel afraid to perpetrate their criminal activities around a law-enforcing officer. In addition, the public will also feel protected and secure to carr y on their day-to-day activities because of the assured security provided by police patrolling in their neighborhoods. These police department will station posts at strategic points in the region, with special considerations of regions that have high rates of crimes such as ghettos, shanties and slum regions. These officers will also conduct 24/7 patrols across the entire region in order to apprehend criminals who might be robbing or stealing, as well as, maintain general security of the area (Sutton and Trueman 14). The next step of reducing crime in my region will be to introduce a community-policing program. This is a program, which will initiate a unique relationship, as well as, a cooperation pact, between the police department and the public. Through this policy, I intend to bring the police closer to the public and foster a close-knit relationship between these two centers of the community. The resultant effect will be the creation of confidence, trust and loyalty between the two parties involved. As such, it will be

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Social Determinant of Health - Essay Example The lower end of the hierarchy becomes the subject of the misfortunes within a given community. The essay will focus on the Martin’s family with an aim of determining how the social determinants of health are crucial. The level health is determined by the way people access different amenities. The social determinants are variables under which health providers depend on while designing health models. The Martin’s family is an extended family with a number of risk factors that determine their health status. The family lineage consist of hereditary diseases and habits that tend to recur a cross the family members. Mary Martin is married to Dominic and after 52 years, she is left a widower. The family had three children with the younger one deceased. Isaac and Julia are both alcoholics and Isaac died from an accident. Gilbert’s wife divorces his first wife and marries a second wife. The marriage results two children. His first marriage on the other hand bore the pair a son. The first wife suffered from asthma. The second wife has a history of schizophrenia. The ex-wife parents were alcoholic, her father died from lung cancers, and her mother dies of breast cancer. The family has a history of asthma, cancer and alcoholism (The Canadian Neighborhood n.d). The Martins family has a history of alcoholism. The factor puts the family at risk of passing the habit to future generation. The family linage has had a history of alcoholism. The male population tends to be at a higher risk of becoming an alcoholic than the female population. The family tends to adapt a culture of alcoholism. The environment under which a person stay, could influence their heath and habits that constitute to their health habits. The alcoholism tends to be a major factor in terms of the family health is concern. Children born from this family will tend to adapt alcoholic habits. The culture would tend to

Case study Assignment Example | Topics and Well Written Essays - 1000 words - 11

Case study - Assignment Example Evaluating, giving feedbacks, making follow up and coaching the juniors like the case with Griffins and York has always been a challenge to leaders. (Duke Corporate Education, 2005). Very few leaders have been trained on ways of formulating and delivering feedback that is constructive and effective; feedbacks that would encourage the concerned parties to change both their personal and professional lives. Research has proved that there are four essential skills required in giving a feedback; self-management, observational, analytical and interpersonal skills. As the vice president, Mary Griffin’s feedback to His subordinate Simon York is very important. Feedback is a very important responsibility to all leaders, supervisors and managers in performance development. A supervisor must carry out descriptive feedback based on behavior on his subordinates for it to be considered effective. It should not be judgmental nor based on one’s personality. Upon issuing the feedback report, the leader should consider coaching the subordinate towards what is expected of him or her. Performance coaching should be a continued process that helps the employees in evaluating their job behavior and their performance with an aim of improving their effectiveness (OToole, 2012). Coaching sessions must be regular; whether they are informal or formal. We will discuss the impacts of healthy interpersonal skills in an organization in relation to the feedback and coaching given by Mary to Simon (Hawkins, 2011). It is of paramount importance for any person in any organization to have good interpersonal skills irrespective of his position in the organization. Interpersonal skills enhance teamwork, bonding and good communication skills. In order for one to appreciate the need of having good interpersonal skills, he must know its importance. The paper focuses on four main significances of

Service Marketing Essay Example | Topics and Well Written Essays - 2500 words - 1

Service Marketing - Essay Example From the report it is clear that a service is an activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. In the goods continuum the distinction between products and services is far from clear as one traverses from tangibility to intangibility. The lack of distinction is particularly prominent mid way through this continuum where tangibility and intangibility may gel indistinguishably. However the fact remains that the tangibility dimension of the offering is a critical distinction and can identify a service offering. For instance, in a hotel stay once the stay has been completed nothing tangible is left with customer for preservation except experience, hence hotel stay is a typical person processing service offering. This study stresses that services are not physical. They can neither be possessed nor seen or felt. The tangible indicators of service are few, if any, and they are not good enough indicators to reduce consumer uncertainty. This increases the work of service marketers who must diligently determine how to effectively communicate the service process and the final outcome the consumer will receive -most importantly the quality. The production of the services can't be separated from its consumption. For instance, the production and consumption of a medical examination happen together. One can not store services for future use.

Juno the Movie Review Example | Topics and Well Written Essays - 2750 words

Juno the - Movie Review Example She is headstrong when she wants to be and this is apparent in the decisions she takes as a teenager saddled with an unplanned pregnancy. The father is her classmate Paulie Bleeker who takes life as it comes. The story unfolds with Juno deciding to give up her child to an urban couple - Mark and Vanessa Loring. This couple goes through a metamorphosis as they try to convince Juno regarding the fact that they would be perfect parents to her child. On the other hand, Juno has to break the new to her parents - stepmother Bren, and father Mac. Juno's parents are a classic example of a couple who strive to keep a close knit family and try to set the right example for their children. What follows here is a confrontation between Juno's parents and the prospective foster parents of her unborn child. This is where the drama element of the movie takes off in order to cater to the following elements: In this paper, these issues will be discussed in terms of an evidence based theory that is based on the foster care system in cases of divorce, teen pregnancy and other such developmental issues within a child. The foster care system in the United States continues to face challenges related to the quality of care provided by foster parents. Although legislation has been passed by the federal government aimed at improving the system, the pervasive negative stereotypes of foster care remain. This is especially true when it comes to the development and family environment of children placed in this environment. In an effort to better understand the development and family environment issues of children in foster care, this research seeks to develop a more integral comprehension of how children in foster care view their own personal development and family environment. With this information, it will be possible to better understand specific development and family environment issues indicative to foster care. In addition, this data will elucidate development and family environment issues that may not be persistent concerns for children in foster care. With this data, social workers could develop p rograms to raise awareness and improve development and family environment outcomes for children in this care setting. To begin with, a foster home has been described as that place where a child is handed over to responsible adults, duly analyzed and hand picked by various relevant authorities. The perception and conception of the various facets of a child's life are built here accordingly depending on the various elements like education, relationships and others. These go on to form a child's perception of aspects like development and family environment and security. Besides these parameters, the paper follows the guidelines that are embedded in the basic conceptual framework followed by the researcher. These have to do with the guidelines and concepts laid down by authorities like WHO. The US Department of Health and Human Services, Administration for Children and Families (2005) reports that at the end of 2004, 800,000 children were served by the foster care system. Of these children, 304,000 represented new entrants into the program. Although this number is part of a larger trend representing a

Analysis on Quality Improvement in Federal Prison Essay Example for Free

Analysis on Quality Improvement in Federal Prison Essay Introduction In the light of establishing a furnished description of the subject tackled on this paper quality improvement (QI) is an organized approach to planning and implementing continuous improvement in performance. Although QI holds promise for improving quality of care and patient safety, federal prisons that adopt QI often struggle with its implementation. This article examines the role of organizational infrastructure in implementation of quality improvement practices and structures in the federal prison.   The author gives more attention specifically on four elements of organizational support and infrastructure for QI-integrated data systems, financial support for QI, organizational integration, and information system capability. Further, these macrolevel factors provide consistent, ongoing support for the QI efforts of clinical teams engaging in direct patient care, thus promoting institutionalization of QI. Results from the multivariate analysis of 1997 survey data on 2,350 federal prisons provide strong support for the hypotheses. Results signal that organizations intent upon improving quality must attend to the context in which QI efforts are practiced, and that such efforts are unlikely to be effective unless appropriate support systems are in place to ensure full implementation. This paper addresses these gaps by examining the role of multiple elements of organizational infrastructure in implementation of QI practices and structures in the federal prison. Our results are intended to provide managers with information about the kinds of resource commitments and structural changes that enhance the value of their investment in QI, and to help policy makers identify policies or incentives that would help the federal prison management reach its utmost desire in the sagacity of Time Quality Management and other sort. Analysis This section consists of a continuous improvement model and the tools of improvement arranged in a logical flow to get the desired results. The emphasis is on all employees. This model and the basic tools utilized can be learned and effectively applied by everyone. There are many statistically based programs that are helpful for driving improvements on very technical problems. These programs are good for what they are designed to do. The limitation is that often they only engage a small percentage of the workforce. Typically, a few managers and a few technologists or engineers will be involved. There are also some good problem-solving techniques available that, all too often, are applied only after a customer-upsetting incident has occurred. Most organizations have, literally, tons of data, and yet very few of them are using it effectively. Within this continuous improvement teaming, you will learn how to convert data into information. The tools that will be used to do this are Pareto diagrams, histograms, scatter diagrams, and charting. Where more information is required, you will learn how to design and implement check sheets to gather the data required to provide the sought-for information. In the beginning of a continuous improvement program, one only needs to have the visibility with regard to the effect of things which are not being performed well in the provision of high quality product or service to the subjects.   With the use of this certain flow of organizational improvement, it shall be easier to make us of a diagram which illustrates the essence of conjunction and brainstorming, hence, not undermining the other external and internal functions bereft the subjects under study.   The poor effects of the organizational strategies which has been utilized may give light on the sagacity of improving the organization’s standards and the elimination of the unnecessary ideas for that instance. Aside from that, if the certain causes are found to be that which is isolated to specific are, person, or time period within the operation, the it will most likely be easier to get a through glimpse of the operation thus learning an echelon of stratification techniques and other unique case which shall be pondered on by the launchers of the study. The factors which have been stated may be that which are implicitly defining the crucial state of improvement and other sort of the like.   However, such does not dente weakness, but rather an innate sense of quality analysis as shown in the diagram below[1].   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Even though the diagram is that which is not focused on the federal prison arena, still, the idea is the same.   The improvement process is a cyclical form hence, having internal and external collaborations.   As stressed by Lewis and Clark in the improvement process, it is important to bear in mind that improvement itself does not stop in a certain peak.   Nevertheless, all state should be equally given consideration and in order to achieve the summit of total satisfaction, it must not only dwell on the ability of the tangibility of entities, but behavioral realms as well. Conclusion Reflecting the growing emphasis on organizational systems of care, QI is an organized approach to planning and implementing continuous improvement in performance. QI emphasizes continuous examination and improvement of work processes by teams of organizational members trained in basic statistical techniques and problem-solving tools who are empowered to make decisions based on their analyses of the data. Like other systems-based approaches, QI stresses that quality depends foremost on the processes by which services are designed and delivered. The systemic focus of QI complements a growing recognition in the field that the quality of the care delivered by clinicians depends substantially on the performance capability of the organizational systems in which they work. While individual clinician competence remains important, many increasingly see the capability of organizational systems to prevent errors, coordinate care among settings and practitioners, and ensure that relevant, accurate information is available when needed as critical elements in providing high-quality care. We argue that implementation of QI in federal prison settings can be facilitated by organizational structures, resources, and operational systems that provide a supportive context for enhancing both the scope and intensity of clinical QI efforts. Scope refers to the extent or range of application of QI philosophy and methods, and, as such, it indicates the pervasiveness with which QI practices permeate organizational structures and routines. QI emphasizes organization-wide commitment and involvement because most-if not all-vital work processes span many individuals, disciplines, and departments (Berwick, Godfrey, and Roessner 1990; James 1989). Intensity refers to the strength of application or degree of focus on QI philosophy and methods and therefore, indicates the degree of development of the QI effort. In a well-developed QI effort, continuous improvement becomes an integral part of the daily work life of organizational members, as opposed to an intermittent or circumscribed activity (Berwick 1990; Deming 1986; Ishikawa 1985). While quality control remains important, continuous improvement becomes the primary goal (Berwick).    References:   Creech, B. (1995). The Five Pillars of TQM: How to Make Total Quality Management Work for You. New York: Plume. Foss, N. (1996). Towards a Competence Theory of the Firm (1 ed.). New York: Routledge. Schwab, D. P. (2004). Research Methods for Organizational Studies (Second ed.). New York: Lawrence Erlbaum. Williamson, O. E. (1995). Organization Theory: From Chester Barnard to the Present and Beyond (Expanded ed.). New York: Oxford University Press, USA. [1] Continuous Quality Improvement (CQI); Lewis and Clark Model.

Carrefour A French Multinational Retailer Marketing Essay

Carrefour A French Multinational Retailer Marketing Essay Introduction Carrefour, a French multinational retailer, was establised by the Fournier and Defforey families as a supermarket in 1959. In 1963, new concept hypermarket, was discovered and invested. Since then, Carrefour owned up to 5,200 stores worldwide, reaching out to 26 countires and region (refer to appendix A). In particular, for Asia, Carrefour have invested in China, Taiwan, Malaysia, Indonesia, India as well as Singapore with approximately 361 hypermarkets, 17 supermarkets and 2 other formats of stores (refer to appendix B). Opening its first store in 1997, Carrefour was the first to introduce hypermarket concept in Singapore, where everything can be purchased under one roof (aisaone business 2012; Krishnan 2012). Oxford dictionaries (online) defines hypermarket as a very large self-service store with a wide range of goods and a large carpark typically situated outside a town. Carrefour had two stores in Singapore; Suntec City and Plaza Singapura. Subsequently, in 2000, Giant, a major hypermarket retailer, joined the market, competing with Carrefour. As a result, Carrefour was not progressing well. Reported by numerous news (refer to appendix C), in a press release on 28 August 2011, Carrefour announced the decision to close its two stores in Singapore by the end of 2012. This decision was reached because Carrefour realized that there is no expansion and growth prospect in Singapore that brings them to a leadership position in the long term. Marketing Problem Segmentation/ Customer Research For 15 years, Carrefour has been providing consumers with one-stop service but it did not turn out as expected. Concluded by Krishnan (2012), Carrefour came in with the mind-set that consumers in Singapore would avoid frequent shopping and hence, would buy as much as possible within a trip. Unfortunately, this prediction was not accurate as this behaviour was not seen popular in Singapore. In addition, both Carrefours outlet was located in central hub which in customer perspective brings significant inconvenience such as high travelling cost and traffic congestion. Moreover, Carrefour does not offer unique products that appeal to consumers, enticing them to choose Carrefour over other retailers and local grocery shops (Krishnan 2012). As a result, Carrefour was observed to be targeting at the wrong country and customer segment, facing huge hurdle in attracting consumers with their one-stop shopping proposition, location and products offered. Sales and Distribution Research Being a hypermarket that offers a wide range of food items and non-food items such as appliances and clothing, Carrefour is in a direct competition position with grocery retailer, supermarket such as NTUC FairPrice (Ng 2012) as well as appliances chains such as Best Denki (Krishnan, 2012), which might eventually affect their sales. On top of these competitors, Giant, a hypermarket open by Dairy Farm Group, is their major competitor. Reported by Krishnan (2012), Giant offers consumer lower price, compensating and outweighing travelling cost. Giant is also able to control consumers behaviour as products sold seems to be more appealing to broader segment of market. Hence, with these competitors at hand, Carrefour did not operate as well as expected. Looking at Carrefours 2011 sales report, illustrated in the pie chart below, the highest contributor of 43.2% is France. Aisa, has the lowest contribution of merely 9% which is approximately à ¢Ã¢â‚¬Å¡Ã‚ ¬73 Million (with the closure of Malaysia and Thailand stores). Source: http://www.carrefour.com/cdc/finance/key-figures/our-key-figures-/key-figures-folder/breakdown-sales.html In addition, reported by TODAY news (2012), in 2009, Aisa has accounted for 7.9% of Carrefours total sales of à ¢Ã¢â‚¬Å¡Ã‚ ¬85.9 billion, with Singapore contributing only à ¢Ã¢â‚¬Å¡Ã‚ ¬85 Million (TODAY/CNA 2012). Comparing it with 2011 annual report, sales revenue in Singapore have decreased. Therefore, the failed in Carrefour may be due to its strong competition in Singapore with its direct and indirect competititors. Objectives The main purpose of this research proposal is to investigate the perception of consuerms towards Carrefour against their competitors in Singapore. The objectives of the research proposal are as follows: To evaluate Carrefours performance in comparision to its competitors To examine factors influencing consumers behaviour in patronizing its preferred hypermarket/supermarket retailer To ascertain what kind (demographic, geographic, psychographic, behavioural) of consumer frequent Carrefour To investigate the degree of brand loyalty consumer have towards Carrefour Research Design Research Question With the aim of achieving the objectives set, research questions have to be formulated. The following are some example pertaining to the research proposal. Which of the supermarket respondent most frequent? In selecting a supermarket, what are the factors that respondent consider most? Rate the level of awareness respondent have towards Carrefour (1 being the most and 7 being the least) How frequent do respondent shop at any of Carrefours outlet? What are the prominent difference between Carrefour and other supermarket? Research Method Aliaga and Gunderson (2000) quoted from Muijs (2011, p.1) defines quantitative research as a method that explains the phenomena of collecting numerical data that are analysed using some mathematically based methods, in particular statistics. The researcher will thus be adopting a quantitative approach, employing primary research personal survey method, focusing on the phenomenon of consumers decision for patronizing a supermarket; their intentions, behaviour and attitude (A study on factors considered by consumers for patronizing a retail outlet 2010) and gather information on consumer awareness towards Carrefour compared to its competitiors. Personal Survey Malhotra and Birks (2007, p.265) and Malhotra (2010, p.211) defines survey as a method that gathers information based upon questioning respondents a variety of questions regarding their behaviour, intentions, attitudes, awareness, motivations and demographic and lifestyle characteristics. Most researcher noticed that survey is simple to administer and hence is a popular quantitative measure amongst all. Although it is argued that survey can be uncontrollable as respondents may be unable or unwilling to provide accurate responds (especially to motives or sensitive questions), it is recognised that due to the limited alternatives available, data collected will be consistent across and variability of results will be reduced (Malhotra 2010; Malhotra and Birks 2007; insights from decision point 2012). Rea and Parker (2012) further argues that commercial enterprises often use surveys to formulate market strategies for the potential widespread use, performance of new and existing products as well as finding out their market value. These aligns to the researchers aim and objective, to gather information on factors that affects consumer patronage behaviour as well as perception of consumer towards Carrefour. Furthermore, due to the surveys fixed-response alternative questions nature and consistent data gathered, coding, analysing and interpreting of survey results are relatively simplier for researchers compared to observation or experiment method. Appendix D shows a diverse survey techniques, and compares them against numerous factors, shown on appendix E. Personal interviwing street survey, occurs when respondents are intercepted while shopping or walking on the street (Malhotra and Birks 2007). Personal survey technique is a method to collect relevant data from target group and evaluation becomes easier (A study on factors considered by consumers for patronizing a retail outlet 2010), generalising the entire target population from a small amount of data gathered (Rea Parker 2012). Additionally, personal survey allows the researcher control the environment, to source for potential surveyee personally, collecting data from the right target segment (Gibran 2010; Rea Parker 2012). Moreover, response rate in persoanl survey can be significantly high as compared to other methods such as mail survey and speed of collecting data is also moderately high. Due to the characteristics of personal survey in appendix E, personal survey will be conducted by the researcher on consumers who patronize any supermarket or hypermarket in Singpaore to collect valuable data on their patronizing behaviour and their level of awareness towards Carrefour against their competitors. Formulate a plan Gibran (2010) suggested that, survey techniques includes selecting respondents randomly from the studied population in an unbiased mannar and having a standardized questionnaire for all respondents. However, Rea and Parker (2012) claims that physical characteristics of surveyee such as attire, cleanliness, manners etcetera is important when selecting respondent. On top of that, sample survey, where data will only be collected from a fraction of the studied population (Statistics Canada 2003, p.2; Rea Parker 2012), will be exploited by the researcher. It is noted that sample survey provides a economical and quicker way of obtaining sufficient information in the field. Hence, in this research, studied population refers to a representative number of consumers, particularly middle-aged women, who patronize any supermarket in any given time. As mentioned, there are two different issues. To attain the objectives, the questionnaire will be targetting at these two issues seperately where specific questions will be asked sequentially. First part of the questionnaire will focus on the factors affecting consumer partonage behaviour while the second part on consumers awareness towards Carrefour. Structured questionnaire, the degree of having a standardisation on data collection (Malhotra and Birks 2007), will be executed by the researcher in a formal and prearranged order,thus having a direct collection process. Although unstructured questions allows respondent to best express their attitudes and opinions towards the topic discussed (Malhotra 2010, p. 343), it will not be address as this is a quantitative research. Hence, the questionnaire will only contain structured questions. Most questions in the questionnaire will be in a likert scale (nominal scale) and respondents will be required to rate them accordingly base on their attitudes and behaviour. Rea and Parker (2012) recommends that sample size must be selected in an appropriate microcosm of the working population. They further concludes that larger samples yield higher degree of accurancy than smaller samples and hence researcher have to weigh the degree of accurancy with time and cost available. Analyze Data Before collating the results through computer-assisted programme, coding will be employed to facilitate capturing of data. This means that researcher will be allocating numerical values to every possible result of each question, giving it meaning (Malhotra 2010; Malhotra Birks 2007). Structured questions will be coded before the fieldwork is performed, while for unstructured questions, responses will be coded after the fieldwork (Statistics Canada 2003; Malhotra 2010, p.455). After which, coded values will be stored into the computer to analyse the questionnaires. As explained by Statistics Canada (2003, p.3), computer-assisted programme enables researcher to directly enter questionnaires into the computer and data will be captured and transform into readable format. Another benefit to computer-assisted programme is that inconsistent and invalid data will be identified instantly for researcher, providing a user-friendly and convenient form of identifying invalid data. The computer-assisted programme used will be SPSS, where data will be analysed into tabular or graphical form (Rea Parker 2012), making comparisons and interpret results for statistical analysis that will be reflected in the research proposal. As this research is about consumers behaviour towards patronizing, the research requires multivariate statistical technique where there are two or more measurements of each element and the variables are analysed simultaneously (Malhotra 2010, p.466). As mentioned, this research involves understanding the patronage behaviour. Hence, responses of the factors that affect respondents behaviour are dependent on each other. For example, respondent patronage behaviour will depend on the location, price, products offered etc. As such, referring to appendix F, a classification of multivariate techniques, the researcher is able to evaluate results with several methods such as cross-tabulation. Conclusion In summary, with the intention of discover the factors to consumer behaviour as well as establishing Carrefours market position in Singapore, the researcher have decided to employ personal survey method. Survey results will be analysed through coding followed by SPSS thereafter by the researcher to interpret these surveys into readable tables and graphs. Limitation Survey may seem to be the best suitable method for this research but it is time-consuming. As mentioned, this research is base on sample survey, which implies that it will not be 100% accurate as not everyone in the studied population is surveyed. Expected contribution With the mentioned objectives, and the methods used to meet these objectives, the researcher believes that this research will be able to contribute to Carrefour in analysing the reasons to their failure in Singapore, thus making improvements in other countries. This research can also set Carrefours management to react fast to changes in other international market, expending their market and prospects.