Distinguish among operating, investing, and financing activities. Managers’ activities and responsibilities can be classified into three broad functions. List and discuss each function. Identify and discuss the relevant costs in accepting an order at a special price Smith & Company claims that the relevant range concept is only important for variable costs. Explain the relevant range concept and discuss whether you agree with Smith & Company.
Explain the rationale for using the IRR to evaluate capital investment projects. Could the IRR for this project differ for GP Manufacturing versus for another customer? IRR = 14.42% Internal Rate of Return is a measurement that investors use to decide whether or not they should pursue a project. The IRR would need to be greater than the required rate of return to do the project. This figure definitely could be different for different customers.
c. What type of organizational structure would you want to use for this company (by function, by process, by product, and so on)? Explain why you would prefer this structure. (2-4 sentences. 1.0 points) c. How important would liability protection be for this type of company? Explain why it would or would not be important.
On what key assumptions should the management based their decision either to purchase the SCC or not? If the management decide to acquire SC, to what key considerations should the President devote his attention in order to make the acquisition an economic success and lastly how appropriate is BF’s hurdle rate of 12% for existing projects. The methodology adopted in carrying out this assignments include among others, checking the company’s background in terms of its acquisition strategy over time and its unique niche in acquiring Southern Comfort Corporation, analyzing the effect of Brown-Forman’s market strategy on the law of demand and supply in a slow market, carrying out swot analysis on the corporation and detailed interpretation of the available of financial data to determine the viability of the proposed acquisition. The limitation encountered is lack of relevant figures to be able to perform a net present value assessment on Southern Comfort. Also looking at the value of the investment over time with the repayment of the loan and the increase in capital value, it is
Do you have any concerns about the suitability of the listed “pure-play” comparable companies? Might these concerns bias your estimate of value in any direction? Perform a sensitivity analysis on assumptions that you suspect to be “key value drivers”—what are the insights you derive from this analysis? Consider other methods of estimating Calaveras’s value, including book, liquidation, and multiples methods. 2.
(TCOs 4 and 8) Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot size in which these are most nearly equal? (Points : 4) Kanban Just-in-time system MRP Least unit cost Least total cost Question 9. 9. (TCO 3) When considering outsourcing, what should firms be sure to avoid? (Points : 4) Losing control of noncore activities that don't distinguish the firm Allowing outsourcing to develop into a substitute for innovation Giving the outsourcing partner opportunities to become a strong competitor Allowing employees transferred to the outsourcing partner to rejoin the
* Are they ethical? 3. Choose TWO of the criteria from your checklist. Explain why each would influence your decision to invest in a company. * What risk is the company?
Answer: c 2. Which of the following is NOT to address the agency conflict between shareholders and managers? a. Maximize sales b. Monitor managers’ activities c. Give incentives based on performance d. Offer stock shares or stock options e. Hostile takeover threat Answer: a 3.
TUI University Tedrick Holmes Module 3 Case 1 Variance Analysis and Performance Evaluation 2 ACC 201 8/3/2011 Introduction In order to understand this case then we must first understand the difference between variable and fixed costs. Variable costs are the costs of labor, material or overhead that change according to the change in the volume of production units. Fixed costs are defined as a cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, or interest expense. As we look at the Pappadeaux case we will discuss how these differences between these two costs can directly affect a business. Analyze and evaluate the case of the Pappadeaux I think that in this case, Harry was unfair in his assessment of Gregory’s performance.