Catawba Industrial Company
1. Is the business fix in its practice of not manufacturing standard design compressors on Sundays since of the accounting loss incurred on each system?
2. The compressor department and its manager are examined based upon revenue. Compute the compressor department revenue with and without Sunday production.
3. If Marge McPhee decides to make 10 light-weight compressors weekly and to sell them at a rate of $8,000, how much better or worse off financially would Catawba be?
4. What weekly production strategy for standard and light weight compressors would result in the highest monetary return for Catawba? That is, how many of each product should Catawba produce weekly?
Presume that you have been hired by Marge McPhee to aid with the three choices she need to make: (1) whether to produce on Sunday, (2) whether to produce any light-weight compressors, (3) the number of each compressor should be manufactured weekly.
You will advise and validate a course of action for each decision. McPhee wants to make the best choice for herself and her department, which is dealt with as a profit center and examined based upon profit as computed in Exhibit 2.
However, the appropriate choice design and her finest interests (in regards to brief term efficiency measurement) may not agree. As an accounting professional, you should notify her of this disparity and explain it so that she can, in turn, discuss it to owners or leading management. Make sure to go over all the task questions within your written analysis. You will require to identify the ideal volume and price to choose the appropriate production schedule.
Memo Instructions
1. The memo is a private job, so you are anticipated to work on it yourself without seeking any one’s help besides the instructor. You need to bring 2 total copies of the memo and any exhibits to class. All assignments should be handed in by the start of the class. Bring a copy of the memo and/or in-depth notes to class with you so you will have the ability to go over the case wisely in class.
2. Download and check out the memo about writing memos provided by the communications experts. You can download it from the course’s web page in the statements section.
3.The memo should:
a.Be written in proper memo format to Marge McPhee. Several templates are provided in MS Word. This assignment has a three-page maximum page limit, not including exhibits. b.Indicate the author’s name and show his/her handwritten initials. c.Begin with a short introductory paragraph stating the purpose of the memo, and end with a brief concluding paragraph. d.Your memo should contain at least the following sections: Sunday manufacturing, Minimum light-weight production, Optimal light-weight and standard production, and Performance evaluation issues. e.If you wish to use brief references to the work of others (including the text and readings assigned for this course, as well as any other sources you may choose), you must acknowledge the source using appropriate footnotes.
