Minnie Mouse is the manager of a production plant. The net sales of the plant for the year ending 2019 was $5 million. Productions costs were at $2 million. Other general and administrative expenses were $250,000. Interest expenses are estimated to be $200,000. The plant is worth $20 million and the plant holds $1 million in inventories. The cash and accounts receivable amount to a total of $400,000. The plant has $200,000 in outstanding bills and has taken a loan of $1 million in long term debt.

Minnie Mouse is in her office thinking about changes to make and plans for the next year. She has reached out to you in helping her make the decision.

Comment on the current plant efficiencies in how well the resources are used.

Minnie Mouse is looking at options to expand the business in the next year. The list of potential plans include:

1. Expand production by borrowing an additional $1 million in long term debt.

2. Perform cost-cutting to reduce the COGS to $1.5 million

Comment on the implications of both the plans.