MGMT8500 W24 Capstone - v30

MGMT 8500: W24 -capstone -V30 Overview: The capstone case tests your understanding of the entire course material in a scenario which resembles a real-life organization. You are provided with a case, where business owners are trying to decide on a new strategic direction. They have engaged your group as Consultants (Conestoga Consultants). They have provided you with their vision and your group in turn has developed scenarios relating to implementation of these scenarios. You will notice that there are four scenarios and in each of them the methodology and objective are provided. You have to analyze these scenarios and discuss their outcomes with the business owners. The outcomes will be delivered in form of a report in MS Word format and supporting calculations in an Excel Workbook. Grading: This is a group assignment, worth 20% of your final grade Related textbook content: The content you are being assessed on, covers the entire course from Weeks 1 – 6 and 9 – 14. Group contract: Prior to the start of group work, you will complete the group contract and upload to the Assignment folder. One contract is to be submitted per group. Group conflicts or teamwork issues: If any such issues arise, please inform your Professor as early as possible. Your Professor will meet with the team and arrive at a resolution Peer review form: One form per student has to be uploaded to the assignment folder along with your final submission. Due date: Your Professor will inform you of the due date. This will be due in Week 15. P a g e 2 | 13

MGMT 8500: W24 -capstone -V30 Project work for Conestoga Consulting: Issue #1: New facility for FFT For acquiring the new facility, the consulting group wanted to evaluate both options of leasing the facility as well as an outright purchase. They gathered data which is presented in Appendix 1. Issue #2: Benchmarking studies of similar companies The consulting group decided to conduct a ratio analysis of two companies and compare trends across major ratios. This would allow them to provide feedback to FFT as to operating metrics they should follow in their new venture. Relevant data is presented in Appendix 2. Issue #3: Static Budget Variance Analysis The consulting group wanted to investigate the company’s performance in this latest period by conducting a static budget variance analysis, comparing the budgeted income statement to the actual income statement. Relevant data is presented in Appendix 3. Issue #4: Retain or Drop a product line The consulting group wanted to determine whether dropping a segment, early evening dinners, would be advisable as it had been showing a loss. If financially feasible, dropping this segment could allow the company to focus on its other product offerings. Relevant data is presented in Appendix 4. Required: At the end of the two-week period, the consulting group would be meeting with the business partners. Prepare a report showing all the calculations and your recommendations for all the four issues. P a g e 5 | 13

MGMT 8500: W24 -capstone -V30 Appendix Two (Benchmarking studies) Objective: To conduct ratio analysis of a comparable company (Waterloo Corporation) and compare with that of the industry. FFT Corporation   Comparative Statements of Financial Position   31-Dec-20             Assets 2020 2019   Cash $ 50,000 $ 25,000   Accounts receivable 65,000 50,000   Merchandise inventory 60,000 70,000   Prepaid Expenses 55,000 30,000   Property, plant, and equipment 300,000 250,000     Total assets $ 530,000 $ 425,000       Liabilities and shareholders' equity   Accounts payable $ 25,000 $ 30,000   Short-term bank loan payable 50,000 65,000   Bonds payable 150,000 160,000   Common shares 150,000 95,000   Retained earnings 125,000 75,000     Total liabilities and shareholders' equity $ 500,000 $ 425,000             FFT Corporation   Income Statement   Year Ended December 31, 2020           Net sales $ 350,000   Cost of goods sold 210,000   Gross profit 140,000   Expenses     Operating expenses $ 40,000     Administration expense 22,000     Rent expense 15,000     Total expenses 77,000   Profit before income tax 63,000   Income tax expense 20,000   Profit $ 43,000       Additional information for 2020:   1 Cash dividends declared and paid. $ 28,000   2 Net cash provided by operating activities in 2020 $ 82,000   P a g e 8 | 13

MGMT 8500: W24 -capstone -V30 Appendix Four (Drop or Retain a Product Line) Objective: Determine whether to Drop or Retain a segment, early evening dinners. As part of this process, a Contribution Margin Income Statement needs to be prepared. Scenario: Using the Income Statement in Appendix One, prepare the Contribution Margin Income Statement, given the following information related to the company’s expenses:  Cost of Goods Sold is 2/3 variable and 1/3 fixed  Operating Expenses are 25% variable and 75% fixed  Administrative Expenses are 50% variable and 50% fixed  Rent Expense is all fixed HINT: Please note that the operating profit that you calculate in your Contribution Margin Income Statement will be the same as the Profit Before Income Tax in the Income Statement provided in Appendix One (in other words, in the student template, the two fields that are shaded in yellow should be the same amount). The financials by segment are then provided in the student template. It is believed that if the segment of early evening dinners is dropped, that half of the fixed expenses of that segment would remain. As well, it is believed that if the segment of early evening dinners is dropped, sales of lunches would increase by 10%. Complete the template accordingly and determine whether this segment should be dropped. P a g e 11 | 13