Discuss the impact of each idea (last four bullets) on TEDs future operational and financial performance.
TED Management's Ideas to Increase Projected Operating Income Offer incentives to entice customers to order product that they would ordinarily order during the first quarter of next year before year end this year (i.e., entice customers to "shift" some of their planned purchases of TED product from next year to this year). These incentives include "bill and hold terms, where TED bills the customer for product that TED will hold in their warehouses until the first quarter of next year, at which point the product will be shipped to customers. TED would recognize these sales in 2016. In addition, if customers are willing to take delivery of additional product before year-end, TED will offer to "buy back" unsold product from their customers at cost in 2017. Increase production to spread fixed overhead costs over more inventory units, increasing the amount of overhead that is capitalized as part of the cost of the inventory on hand at 12/31, and reducing the amount of overhead that is included in COGS for the current period. Reschedule routine year-end maintenance usually performed by 12/31 to January 2017. Classify repair expenses for non-production machinery as additions/replacements that should be capitalized. Temporarily loosen the credit approval process to allow orders from marginal customers, without increasing bad debt expense and the allowance for doubtful accounts. Reduce the bad debt expense percent toward the lower end of the estimated tolerable range of 1 percent to 4 percent of sales. Extend depreciable lives for certain pieces of equipment. Cut Advertising and/or R&D spending in the last two months of the fiscal year. TED Management's Ideas to Increase Projected Operating Income Offer incentives to entice customers to order product that they would ordinarily order during the first quarter of next year before year end this year (i.e., entice customers to "shift" some of their planned purchases of TED product from next year to this year). These incentives include "bill and hold terms, where TED bills the customer for product that TED will hold in their warehouses until the first quarter of next year, at which point the product will be shipped to customers. TED would recognize these sales in 2016. In addition, if customers are willing to take delivery of additional product before year-end, TED will offer to "buy back" unsold product from their customers at cost in 2017. Increase production to spread fixed overhead costs over more inventory units, increasing the amount of overhead that is capitalized as part of the cost of the inventory on hand at 12/31, and reducing the amount of overhead that is included in COGS for the current period. Reschedule routine year-end maintenance usually performed by 12/31 to January 2017. Classify repair expenses for non-production machinery as additions/replacements that should be capitalized. Temporarily loosen the credit approval process to allow orders from marginal customers, without increasing bad debt expense and the allowance for doubtful accounts. Reduce the bad debt expense percent toward the lower end of the estimated tolerable range of 1 percent to 4 percent of sales. Extend depreciable lives for certain pieces of equipment. Cut Advertising and/or R&D spending in the last two months of the fiscal year
