The vice president of manufacturing is perplexed. When the new Sunbeam Plant bega rations three years ago it appeared to live up to the expectations of top management. the t was modern, well lighted, and spacious. Cost variances were favorable, customers wer ily satisfied with quality and service, and the plant reported large segment contributions to amon costs and profits despite high start-up costs and early period depreciation. Just three years later the Sunbeam Plant seems to be declining into crisis management ough most cost variances, especially those dealing with cost center efficiency, remais rable, the plant's segment contribution is declining and customers are complaining abou r quality and slow delivery. Several customers have suggested that if the firm canno ect its quality and delivery problems thy will take their business elsewhere. The shop flo mess with in-process inventory piled everywhere. Production employees complain c culty in locating jobs to be worked on, and scheduling personnel have recently requested
The vice president of manufacturing is perplexed. When the new Sunbeam Plant bega rations three years ago it appeared to live up to the expectations of top management. the t was modern, well lighted, and spacious. Cost variances were favorable, customers wer ily satisfied with quality and service, and the plant reported large segment contributions to amon costs and profits despite high start-up costs and early period depreciation. Just three years later the Sunbeam Plant seems to be declining into crisis management ough most cost variances, especially those dealing with cost center efficiency, remais rable, the plant's segment contribution is declining and customers are complaining abou r quality and slow delivery. Several customers have suggested that if the firm canno ect its quality and delivery problems thy will take their business elsewhere. The shop flo mess with in-process inventory piled everywhere. Production employees complain c culty in locating jobs to be worked on, and scheduling personnel have recently requested
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![The vice president of manufacturing is perplexed. When the new Sunbeam Plant began
operations three years ago it appeared to live up to the expectations of top management. the
plant was modern, well lighted, and spacious. Cost variances were favorable, customers were
highly satisfied with quality and service, and the plant reported large segment contributions to
common costs and profits despite high start-up costs and early period depreciation.
Just three years later the Sunbeam Plant seems to be declining into crisis management.
Although most cost variances, especially those dealing with cost center efficiency, remain
favorabie, the plant's segment contribution is declining and customers are complaining about
poor quality and slow delivery. Several customers have suggested that if the firm cannot
correct its quality and delivery problems thy will take their business elsewhere. The shop floor
is a mess with in-process inventory piled everywhere. Production employees complain of
difficulty in locating jobs to be worked on, and scheduling personnel have recently requested a
larger computer to help keep tract or work-in-process.
The vice president said she does not even know where to begin to try and figure out
how to salve the plant's problems. She commented, "What is really weird is that we all work so
hard. Our facilities are the best in the business, and I know our employees are dedicated, well
trained, and hard working. They do exactly what we ask, and we have never had any labor
problems. It just seems like the harder we work the worse our problem become.
Required:
Suggest the nature of Sunbeam Plant's problems and recommend how the vice
president might begin to try and figure out how to solve the plant's problem.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7aeb697d-1aa8-4d1d-a0e3-20e96925ab3b%2F93028c6f-5e10-41e1-a8fc-3c56da728749%2Fs74ik8q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The vice president of manufacturing is perplexed. When the new Sunbeam Plant began
operations three years ago it appeared to live up to the expectations of top management. the
plant was modern, well lighted, and spacious. Cost variances were favorable, customers were
highly satisfied with quality and service, and the plant reported large segment contributions to
common costs and profits despite high start-up costs and early period depreciation.
Just three years later the Sunbeam Plant seems to be declining into crisis management.
Although most cost variances, especially those dealing with cost center efficiency, remain
favorabie, the plant's segment contribution is declining and customers are complaining about
poor quality and slow delivery. Several customers have suggested that if the firm cannot
correct its quality and delivery problems thy will take their business elsewhere. The shop floor
is a mess with in-process inventory piled everywhere. Production employees complain of
difficulty in locating jobs to be worked on, and scheduling personnel have recently requested a
larger computer to help keep tract or work-in-process.
The vice president said she does not even know where to begin to try and figure out
how to salve the plant's problems. She commented, "What is really weird is that we all work so
hard. Our facilities are the best in the business, and I know our employees are dedicated, well
trained, and hard working. They do exactly what we ask, and we have never had any labor
problems. It just seems like the harder we work the worse our problem become.
Required:
Suggest the nature of Sunbeam Plant's problems and recommend how the vice
president might begin to try and figure out how to solve the plant's problem.
![Assume that Thompson Manufacturing Company (TMC) incurs the following costs in producing
electronic components every month:
Direct materials
P5.00/unit
3.00/unit
Direct labor
Variable factory overhead
Fixed factory overhead
2.00/unit
30,000
Assume further that TMC found a producer of the same electronic components and is
entertaining the idea of buying 5,000 units per month for one year instead of processing all the
components. If this plan pushes through, the buying price per unit will be P2.20. This plan will
reduce TMC's material costs by 10% and direct labor & variable factory overhead by 20%.
Fixed factory overhead of P20,000 will be eliminated.
Required:
1. Determine the net effect of buying the components on the net income. Will you outsource
the components?
2. Cite at least two examples of benefits, associated with supply chain management, in the
event that TMC decides to buy the components.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7aeb697d-1aa8-4d1d-a0e3-20e96925ab3b%2F93028c6f-5e10-41e1-a8fc-3c56da728749%2Fue8occ_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume that Thompson Manufacturing Company (TMC) incurs the following costs in producing
electronic components every month:
Direct materials
P5.00/unit
3.00/unit
Direct labor
Variable factory overhead
Fixed factory overhead
2.00/unit
30,000
Assume further that TMC found a producer of the same electronic components and is
entertaining the idea of buying 5,000 units per month for one year instead of processing all the
components. If this plan pushes through, the buying price per unit will be P2.20. This plan will
reduce TMC's material costs by 10% and direct labor & variable factory overhead by 20%.
Fixed factory overhead of P20,000 will be eliminated.
Required:
1. Determine the net effect of buying the components on the net income. Will you outsource
the components?
2. Cite at least two examples of benefits, associated with supply chain management, in the
event that TMC decides to buy the components.
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