Question
You are the operations manager for a small kayak and canoe manufacturer (Valley Kayaks) located on the Pacific Northwest (Oregon). Lately your company has experienced
You are the operations manager for a small kayak and canoe manufacturer (Valley Kayaks) located on the Pacific Northwest (Oregon). Lately your company has experienced product quality problems. Simply put, the kayaks that you produce occasionally have defects and require rework. Consequently, you have decided to assess the impact of introducing a total quality management (TQM) program. After discussing the potential effects with representatives from marketing, finance, accounting, and quality, you arrive at a set of estimates (contained in the following table). Top management has told you that they will accept any proposal that you come up with PROVIDED that it improves the return on assets measure by at least 20 percent
Category Current Values Estimated Impact of TQMSales $3,900,0007%+ (improvement)Cost of goods sold $3,000,0000%Variable expenses $500,00010.50% (reduction) Fixed expenses $195,0000%Inventory $381,00020%Accounts receivable$357,0000%Other current assets $789,0000%Fixed assets $681,0000%
a.Calculate ROA with changes and without changes?(Round your answers to 2 decimal places.)
b.Would you go forward with this proposal to improve quality?
- Yes
or
- No
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started