OZU Corporation has just experienced a disappointing profit year. Costs appear to be out of control and as a result, profits are far below expectations in spite of the fact that marketing has "made plan" this year. Our job is examine OZU Corporation's financial information and help determine what areas of operation should be examined. Budgeted Inputs and Sales (Reference): OZU Corporation which has three products P1 P2 P3 Labor hours per unit 0.20 0.25 0.40 Material (pounds per unit) 1.0 1.1 1.3 Kilowatt hours per unit 0.5 0.6 0.8 Budgeted sales (units) 10,000 6,000 2,000 Forecasted price ($) 15 20 40 Budgeted sales were based on a projected 10% market share. OZU Corporation actually achieved a 13% market share. Budgeted Product Costs and Contribution Margins (Reference) P1 P2 P3. Selling price Variable costs: $15.00 $20.00 $40.00 Labor 4.00 5.00 8.00 Materials 4.00 4.40 5.20 Energy 3.00 3.60 4.80 Profit $4.00 $7.00 $22.00 Budgeted Income Statement (Reference): OZU Corporation Sales $350,000 Labor $86,000 Materials $76,800 Energy $61,200 Variable costs Profit 224,000 $ 126,000 W Actual Income Statement (Review): OZU Corporation Sales $385,000 Labor $109,452 Materials $96,448 Energy $61,671 Committed overhead Profit 84,000 $ 301.000 Quantities and prices of outputs and inputs (Actual) (Review) Outputs Inputs Quantity Price Quantity Price P1 12,000 $16 Labor 5,212 hr $21.00 P2 5,500 22 Materials 21,920 lb 4.40 P3 1,800 40 Energy 10,633 kwhr 5.80 Line item income statement variance analysis Actual (Review) Budgeted (Reference) Variance % Sales $385.000 $350,000 $35.000 10.0 Labor 109,452 86,000 23,452 27.3 Materials 96,448 76,800 19,648 25.6 Energy 61.671 61.200 471 0.8 Variable costs 267,571 224,000 43,571 19.5 Committed overhead 84.000 80.000 4.000 5.0 Profits $ 33.429 $ 46.000 $12.571 27.3 a. Compute the Multifactor Productivity (Total Productivity), Multifactor PRR (Total PRR), and Multifactor Profitability (Total Profitability) Index through the APC(PPP) Approach W b. What will be the impact if PDF2 reduced by half for each product type. Fill the Table below Labor hours per unit (hr/unit) =ST= P1 P2 P3 0.20 0.25 0.40 PFD2 %= 50% 25% 25% Q1(Plunit) Q2 (P2unit) Q3 (P3unit) Determine the revised maximum budgeted production amount (Q-Unit/period) if PDF2 % reduced by half for each of the product type (respectively 25% 12,5 %; 12,5% ) Revised Total Labor Productivity Index (if actual sales are the same as the revised production amount of each product) Revised Total Labor PRR Index Revised Total Labor Profitability Index c. Build the OMAX Framework of the OZU Corporation with the given Criteria below. C1: Market Share C2: Quality (find info below) C3: PRR C4: Productivity C5: Profitability It was decided that the weights of the criteria C1:4 % C2:9% C3:14% C4:22% C5:51% W 1.Propose an OMAX Matrice and calculate the score for the actual year. To determine the target value, worst value, class ranges etc, needed for each criterion is entirely up to you. As long as we can calculate the score for the actual year score of OZU Corporation Actual Budgeted 73% C2: Quality measure: Customer 65% Complaints % CL:Market Share OZU Corporation Budgeted actually sales were achieved a based on a 13% market projected share. 10% market share. C3, C4, C5 Consider your answers to Question 1 d. Draft a short memo that indicates where the President should look when evaluating this period's performance. Indicate what results appear favorable and where there may be problems. (Based and justified on your findings in PPP and OMAX) W