COULD YOU PLEASE HELP ME? THANK YOU!

Question 1- How can Jeff improve net income?

Question 2-Using Show me the Money answer questions 2 - 5. What is the Price Using the Factor Method? Show work

Question 3- What is the Price Using Prime Cost? Show Work

Question 4- What would be the effect of pricing all items using prime cost versus the factor method.

Question 5- What is the payback period and NPV

The new director of foodservices for the Evergreen Computer Company, Jeff Jordan, has some real concerns. He was hired to turn around the foodservice operation that was experiencing major financial difficulties. Upper-level management noticed that the net profit of the foodservice operation has dropped from nearly $40,000 in the first quarter to less than $15,000 in the fourth quarter in spite of rising sales. Jeff's job is to identify the problem and fix it. As Jeff analyzed the profit and loss statement (see Profit and Loss Statememt), it became clear that the item that was rising the fastest was the cost of goods sold. This increase was occurring in an environment where the cost of living had increased by 2.5% on an annual basis. Cost of good sold includes the cost of food used to produce meals. Controllable expenses that include salaries and wages, employee benefits, direct operating expenses, energy and utility services, administrative and general sales. Jeff considered controllable expenses to be under good control. The previous director had thought that an appropriate strategy to increase net income was to increase prices for meals. Upper-level management did not view raising prices favorably if there was any other way to avoid losses. The company provided the space for the foodservice rent-free and they believed that there should be some profits accruing to the organization. The way things were going it looked as if the next quarter could show a loss in net income. Evergreen Computer Compant is the headquarter, the major manufacturing location, and the warehouse for a computer firm that produces both personal computers and software to support business applications. There are approximately 1,100 employees in the headquarter building with another 1,200 employees in the manufacturing facility and warehourse. Food is prepared in the main kitchen in the headquarters and is served there in a cafeteria as well as in several satellite cafeterias scattered throughout the complex. There are also a number of mobile carts that provide food for coffee breaks and light snacks in a variety of ways. The mobile carts carry a cash drawer to accept payment for products sold. Food costs are determined by adding up all costs of food received plus the beginning inventory. The ending inventory is subtracted to provide the cost of food used during the time period (see Inventory Reconciliation) The production manager routinely submits requisition to the storeroom for needed ingredients and supplies. These are delivered to the production area on a daily basis. Jeff noticed that the storage facilities are not always locked. Additionally when ingredients are forgotton, the production staff goes to the storage area and picks up needed items. There are many doors in and out of the various production and service units through which people can pass at will. The cashiers in all of the cafeteria are longtime employees who use POS registers. They have many friends among the employees of the computer firm who they greet by name and engage in conversation. The receiving and storage systems are completely computerized so that a perpetual inventory is maintained. The purchasing manager uses the perpetual inventory to order. Frequently, however, products that are listed as available in the computer are not found in the storage facilities. A physical inventory is conducted once each quarter to verify the perpetual inventory (see Inventory Reconciliation). When Jeff compared the physical inventory with requisitions, there was shrinkage of over $55,000 in three months. Sales -Cost of goods sold Gross profit Profit and Loss Statement 1" quarter 2nd quarter $760,518 $771,144 325,502 341,851 435,016 429,293 3 quarter $780,252 355,449 424,803 4th quarter $787,842 378,765 409,077 357,443 363,438 366,718 370,286 -Controllable expenses =Income before interest & depreciation 77,573 65,855 58,085 38,791 -Interest -Depreciation =Income before taxes 7,605 9,126 60,842 7,605 9,126 49,124 7,605 9,126 41,354 7,605 9,126 22,060 -Taxes =Net Income 21,294 39,548 17,544 31,580 14,474 26,880 7,721 14,339 Value of Inventory on 1 October + Food purchases (Oct.-Dec.) = Cost of food available Inventory Reconciliation $3,500 379,965 383,463 -Inventory on 1 January =Cost of food used 4,700 378,765 -Cost of direct and requisition =Differences 323,997 $57,768