NAME NOTE: Read the case below and calculate, explain, and write up your conclusion for your choice. There are 6 questions to be answered. An example of a side by side comparison follows question 6 for demonstrative purposes - you do not need to respond to the example. Raider Red Company owns numerous facilities and production plants. The company routinely evaluates proposals as to whether they will improve operations. They are currently reviewing the four following proposals. One involves the suggestion to close the unprofitable store in the Depot District. Another is to outsource the acquisition of tortillas, rather than making them. Another proposal is to sell packaged beef to a non-competing restaurant chain under a private label. The last proposal is the throw out items with an old logo. You are the controller for Raider Red Company and are to analyze staff reports for each proposal. For each proposal, perform a side by side comparison. On one side show the results of accepting the recommendation and on the other side show the rejection of the recommendation. (Hint: Spreadsheets would be very useful for the analysis). Write up your approach to your analysis and your conclusion (your decision and why) for each scenario. Show all your work. Summary for each proposal are as follows: 1. Depot District Proposal: Staff recommendation is that the Depot District store should be closed. The company is a consistent money loser. Below is a contribution margin income statement for the Depot District store for the past year. Half of the fixed expenses relate to the store's rent under a 20 year non-cancelable lease. The lease costs cannot be avoided, and the location is not able to be subleased to another company. Perform a side by side comparison. On one side show the results of accepting the recommendation and on the other side show the rejection of the recommendation. Write up your approach to your analysis and your conclusion (your decision and why). Show all your work. Depot District CM Income Statement Sales Revenues $1,400,000 Variable Expenses 1,000,000 400,000 Contribution Margin Fixed Expenses 650,000 Income (loss) $(250,000) NAME NOTE: Read the case below and calculate, explain, and write up your conclusion for your choice. There are 6 questions to be answered. An example of a side by side comparison follows question 6 for demonstrative purposes - you do not need to respond to the example. Raider Red Company owns numerous facilities and production plants. The company routinely evaluates proposals as to whether they will improve operations. They are currently reviewing the four following proposals. One involves the suggestion to close the unprofitable store in the Depot District. Another is to outsource the acquisition of tortillas, rather than making them. Another proposal is to sell packaged beef to a non-competing restaurant chain under a private label. The last proposal is the throw out items with an old logo. You are the controller for Raider Red Company and are to analyze staff reports for each proposal. For each proposal, perform a side by side comparison. On one side show the results of accepting the recommendation and on the other side show the rejection of the recommendation. (Hint: Spreadsheets would be very useful for the analysis). Write up your approach to your analysis and your conclusion (your decision and why) for each scenario. Show all your work. Summary for each proposal are as follows: 1. Depot District Proposal: Staff recommendation is that the Depot District store should be closed. The company is a consistent money loser. Below is a contribution margin income statement for the Depot District store for the past year. Half of the fixed expenses relate to the store's rent under a 20 year non-cancelable lease. The lease costs cannot be avoided, and the location is not able to be subleased to another company. Perform a side by side comparison. On one side show the results of accepting the recommendation and on the other side show the rejection of the recommendation. Write up your approach to your analysis and your conclusion (your decision and why). Show all your work. Depot District CM Income Statement Sales Revenues $1,400,000 Variable Expenses 1,000,000 400,000 Contribution Margin Fixed Expenses 650,000 Income (loss) $(250,000)
