Bradford Company, a manufacturer of small tools, implemented lean manufacturing at the end of 20x1. The company’s goal for the year was to increase the ROS to 40 percent of sales. A value-stream team was established and began to work on lean improvements. During the year, the team was able to achieve significant results on several fronts. The Box Scorecard below reflects the performance measures at the beginning of the year, midyear, and end of year. Although the team members were pleased with their progress, they were disappointed in the financial results. They were still far from the targeted ROS of 40 percent. They were also puzzled as to why the improvements made did not translate into significantly improved financial performance.
Required:
- 1. From the scorecard, what was the focus of the value-stream team for the first six months? The second six months? What are the implications of these changes?
- 2. Using information from the scorecard, offer an explanation for why the financial results were not as good as expected.
- 3. Suppose that on December 31, 20x2, a potential customer offered to purchase an order of goods that would increase weekly revenues in January by $100,000 and material cost by $30,000. Using the old
standard cost system, the projected conversion cost of the order would be $60,000. Would you recommend that the order be accepted or rejected? Explain.
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Chapter 15 Solutions
Cornerstones of Cost Management (Cornerstones Series)
- Financial data for Hunger Games Company for last year appear below: Hunger Games Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $120,700 $220,000 Accounts receivable 225,000 475,000 Inventory 317,000 390,000 Plant and equipment (net) 940,000 860,000 Investment in Katniss Company 100,000 98,000 Land (undeveloped) 198,000 65,000 Total assets $1,900,700 $2,108,000 Liabilities and owners' equity: Accounts payable $178,700 $8,000 Long-term debt 512,000 600,000 Owners' equity 1,210,000 1,500,000 Total liabilities and owners' $1,900,700 $2,108,000 equityarrow_forwardLiability?arrow_forwardSolve this question financial accountingarrow_forward
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