Only question 2 please

Exercise 1. Lap Tech Inc. (32 points) Please download Excel file "SMCS_Exercise_1.xisx" and conduct your calculations there. Please name the Excel file with your solutions as "SMCS_Exercise_1_youridnumber.xlsx" and upload it. You do not have to show calculations in the boxes below the questions. The manufacturing company LapTech Inc. is considering to launch a new tablet. For the production of tablets, the company needs a new machine to assemble a special screen to the tablet. The manager of the Tablet Division is requested to prepare a forecast to evaluate whether such an investment would be beneficial. The forecast data provided by the manager is presented in Table 1 and Table 2. Table 1. Forecasted and actual data for the project Data Project Forecast (Static Budget) Project Actual Net initial investment [(] 3,000,000 3,000,000 Useful life [years] 10 10 Terminal disposal value [(] 0 0 RRR [% 10% 10% Income tax rate [%] 30% 30% Depreciation Straight line Straight line Table 2. Forecasted and actual operating data Data Project Forecast (Static Budget) Project Actual Number of Tablets produced and sold 30,000 30,500 Sales Price [E per Tablet 450 140 Units of Screen purchased and used 31,500 33,245 Fixed operating costs [(] 4,700,000 4,700,000 Variable operating costs [( per Screen] 260 250 1. Calculate the NPV of the project based on the manager's forecast. Would top- management invest in the project? (8 points)Suppose that the top-management of the company approved the project. At the end of the first year, the manager of the Tablet Division observes the actual results (see Table 2). In order to evaluate the performance of the production department and its two managers (the procurement manager, who is responsible for purchasing materials, and the assembly manager, who is responsible for running an efficient assembly process), he asks you to conduct a variance analysis. 2. Variance Analysis (17 points) a. Calculate the flexible budget (i.e., standard cost budget) based on the actual number of tablets produced. Hint: first determine the standard quantity based on the actual number of tablets produced. (3 points) b. Calculate the cost variance based on the flexible budget. How large is the volume effect? (4 points) c. Why is it important for LapTech Inc. to calculate the cost variance based on a flexible budget? (2 points) d. Calculate price variance and quantity variance. Are these variances favorable or unfavorable? What do these variances suggest about the performance of the assembly and the procurement manager? (4 points) e. Do the price variance and the quantity variance add up to the total cost variance? What would you recommend the company to do with potential differences between the total cost variance and the sum of the price and quantity variance? Should the managers be responsible for the difference in the variance? (4 points).11in cc}: Inc. has heea linking the bonus of managers of the production department to total costs. In particular1 the bonus is determined by the extent the department outperfemrs the {static} budget that is proposed by the managers in the beginning of the year. The top management claims that the bonus system would align the managers' interest with the company's objectives efheing a east leader in the industry. 3. Evaluate the performance measurement and reward system of LapTecfr Inc. {T points). a. Name one possible problem that is likely to arise when the performance of the production department is measured based on the budget it proposes. How could the managers maximize their bonus without increasing the company's prot? {2 points] b. Evaluate the current performance measurement of the assembly manager and the procurement manager with regard to eongruence and eontrollability aspects. Briey explain your answer! (3 points) c. Please suggest one additional performance measures for the procurement manager and one additional performance measure for the assembly managers to improve the incentive system. Briey explain your choice. {2 poms) Exercise 1. Lap Tech Inc. (32 points) Table 1. Forecasted and actual data for the project Data Project Forecast Project Actual (Static Budget) Net initial investment [(] 3.000.000 3,000,000 Useful life [years 10 10 Terminal disposal value 0 RRR [%] 10% 10% Income tax rate [%] 0% 30% Depreciation Straight line Straight line Table 2. Forecasted and actual operating data Project Forecast Data Project Actual (Static Budget) Number of tablets produced and sold 30,000 30.500 Sales Price [E per tablet] 450 440 Units of Screen purchased and used 31,500 33,245 Fixed operating costs [E .700.000 4,700,000 Variable operating costs [E per 260 250 screen # Year 1 2 3 4 5 6 7 8 9 10 Discount factor 1 Net initial investments operating cash 2 flow Cash flow from 2.1 operations Income tax cash savings from depreciation 2.2 deductions erminal disposal 3 price otal annual cash 4 flows Discounted annual 5 cash flows NPV [E] DepreciationExercise 1. Lap Tech Inc. (32 points) Table 2. Forecasted and actual operating data Data Project Forecast (Static Budget) Project Actual Number of tablets 30,000 30,500 produced and Sales Price [ per 450 140 tablet] Units of Screen purchased and 31,500 33.245 used Fixed operating 4,700,000 4,700,000 costs [(] Variable operating costs [E 260 250 per screen] Question 2a in [E] Standard quantity Flexible budget (Standard cost) Question 2b in [{] Please choose from dropdown list Cost variance Volume effect Question 2d in [(] Please choose from dropdown list Price Variance Quantity Variance