problem 1:

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

Month1234Throughput time (days)????Delivery cycle time (days)????Manufacturing cycle efficiency (MCE)????Percentage of on-time deliveries78%74%71%68%Total sales (units)3780361834333304

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

Average per Month (in days)1234Move time per unit0.70.50.60.6Process time per unit2.32.22.12.0Wait time per order before start of production25.027.430.032.4Queue time per unit4.95.66.47.3Inspection time per unit0.40.50.50.4

Required:

1-a. Compute the throughput time for each month.

1-b. Compute the delivery cycle time for each month.

1-c. Compute the manufacturing cycle efficiency (MCE) for each month.

2. Evaluate the company's performance over the last four months.

3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production.Compute the new throughput time and MCE.

3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

problem 2

Financial data for Joel de Paris, Inc., for last year follow:

Joel de Paris, Inc.

Balance SheetBeginning

BalanceEnding

BalanceAssetsCash$129,000$134,000Accounts receivable344,000483,000Inventory578,000474,000Plant and equipment, net809,000809,000Investment in Buisson, S.A.397,000435,000Land (undeveloped)250,000253,000Total assets$2,507,000$2,588,000Liabilities and Stockholders' EquityAccounts payable$388,000$333,000Long-term debt1,018,0001,018,000Stockholders' equity1,101,0001,237,000Total liabilities and stockholders' equity$2,507,000$2,588,000

Joel de Paris, Inc.

Income StatementSales$4,136,000Operating expenses3,598,320Net operating income537,680Interest and taxes:Interest expense$113,000Tax expense208,000321,000Net income$216,680

The company paid dividends of $80,680 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%.

Required:

1. Compute the company's average operating assets for last year.

2. Compute the company's margin, turnover, and return on investment (ROI) for last year.(Round "Margin", "Turnover" and "ROI" to 2 decimal places.)

3. What was the company's residual income last year?

problem 3:

The contribution format income statement for Huerra Company for last year is given below:

TotalUnitSales$998,000$49.90Variable expenses598,80029.94Contribution margin399,20019.96Fixed expenses321,20016.06Net operating income78,0003.90Income taxes @ 40%31,2001.56Net income$46,800$2.34

The company had average operating assets of $510,000 during the year.

Required:

1. Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover.

For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above.

2. Using Lean Production, the company is able to reduce the average level of inventory by $108,000. (The released funds are used to pay off short-term creditors.)

3. The company achieves a cost savings of $7,000 per year by using less costly materials.

4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $121,000. Interest on the bonds is $11,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per year.

5. As a result of a more intense effort by sales people, sales are increased by 25%; operating assets remain unchanged.

6. At the beginning of the year, obsolete inventory carried on the books at a cost of $18,000 is scrapped and written off as a loss.

7. At the beginning of the year, the company uses $185,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock.