Scribd Logo
Upload

Welcome to Scribd!

  • 45 views

    Mr. Mcclintock Can Analyse The Following Factors To Decide Whether or Not To Adopt Level Production Plan

    Uploaded by

    sanket verma
    Mr. McClintock can consider several factors to decide whether to adopt a level production plan for his toy manufacturing business: 1) Business risk from product obsolescence 2) Inventory carrying costs 3) Labor costs 4) Equipment usage 5) Average shelf life of toys 6) Degree of customization in orders 7) Labor availability and recruitment costs

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    Mr. Mcclintock Can Analyse The Following Factors To Decide Whether or Not To Adopt Level Production Plan

    Uploaded by

    sanket verma
    45 views10 pages
    Mr. McClintock can consider several factors to decide whether to adopt a level production plan for his toy manufacturing business: 1) Business risk from product obsolescence 2) Inventory carrying costs 3) Labor costs 4) Equipment usage 5) Average shelf life of toys 6) Degree of customization in orders 7) Labor availability and recruitment costs

    Original Title

    Group8_ToyWorld.xlsx

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Mr. McClintock can consider several factors to decide whether to adopt a level production plan for his toy manufacturing business: 1) Business risk from product obsolescence 2) Inventory carrying costs 3) Labor costs 4) Equipment usage 5) Average shelf life of toys 6) Degree of customization in orders 7) Labor availability and recruitment costs

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    45 views10 pages

    Mr. Mcclintock Can Analyse The Following Factors To Decide Whether or Not To Adopt Level Production Plan

    Uploaded by

    sanket verma
    Mr. McClintock can consider several factors to decide whether to adopt a level production plan for his toy manufacturing business: 1) Business risk from product obsolescence 2) Inventory carrying costs 3) Labor costs 4) Equipment usage 5) Average shelf life of toys 6) Degree of customization in orders 7) Labor availability and recruitment costs

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 10

    Mr.

    McClintock can analyse the following factors to decide whether or not to adopt level production plan:-
    1 Business Risk i.e obsolence Risk
    2 Inventory Carrying Cost
    3 Labour Cost
    4 Usage of Equipment
    5 Average shelf life of a typical toy
    6 Level of customization in an order
    7 Labor availibility and recruitment cost
    2. What savings would be involved?

    Level production vs Normal production

    Savings in overtime wage premium 225,000.00


    Savings in additonal direct labour hour 265,000.00
    Higher handling and storage costs (115,000.00)
    Total Savings 375,000.00

    Column1 Jan Feb Mar Apr May Jun


    Net Profit (Level Production) -109 -103 -98 -103 -104 -104
    Net Profit (Normal Production) -112 -106 -102 -106 -107 -107
    Monthly Savings 3 3 4 3 3 3

    Clearly level production is much more benefecial as compared to the normal, season production
    Jul Aug Sep Oct Nov Dec Total
    -100 235 286 355 389 119 577
    -104 185 228 288 316 85 358
    4 50 58 67 73 34 219
    Column1 CASH BUDGET Column2 Column3 Column4
    Jan Feb Mar Apr
    CASH INFLOWS:
    Collection from Sales (60-day credit period) 2285 1115 120 140
    Interest Income (Post Tax) 1.32 2.64 3.3 2.64
    TOTAL CASH INFLOW 2286 1118 123 143

    CASH OUTFLOWS:
    Payments to Suppliers (30-day period) 334.5 36 42 48
    Tax Payments 0 0 0 35
    Long Term Debt Repayment 0 0 0 0
    Operating Expenses 210 210 210 210
    TOTAL CASH OUTFLOW 335 36 42 83

    NET CASH INFLOW (OUTFLOW) 1952 1082 81 60

    Beginning Cash 200 1400 2481 2563


    Ending Cash Without Loan 2152 2481 2563 2622
    Loan Availed (if required) 0 0 0 0
    Loan Repayment 752 0 0 0
    Ending Cash Balance With Loan 1400 2481 2563 2622
    Column5 Column6 Column7 Column8 Column9 Column10 Column11 Column12
    May Jun Jul Aug Sep Oct Nov Dec

    160 140 140 140 160 1620 1840 2140


    1.98 1.98 1.32 0.66 0.66 0.66 0.66 0.66
    162 142 141 141 161 1621 1841 2141

    42 42 42 48 486 552 642 685.5


    0 35 0 0 35 0 0 35
    0 25 0 0 0 0 0 25
    210 210 210 210 210 210 210 210
    42 102 42 48 521 552 0 60

    120 40 99 93 -360 1069 1841 2081

    2622 2742 2782 2882 2974 2614 3683 5523


    2742 2782 2882 2974 2614 3683 5523 7604
    0 0 0 0 0 0 0 0
    0 0 0 0 0 0 0 0
    2742 2782 2882 2974 2614 3683 5523 7604
    Column13
    Total

    0
    0
    10018

    1673
    140
    50
    0
    1863

    4313

    32467
    40623
    0
    752
    39871
    Column1 1993 % of Sales 1994 % of Sales2
    Net Sales 7967 100% 10000 100%
    Cost of goods sold 5577 70% 7000 70%
    Gross Profit 2390 30% 3000 30%
    Operating expenses 1912 24% 2400 24%
    Interest expenses 85 1% 95 1%
    Interest income 16 0% 28 0%
    PBT 409 5% 533 5%
    34% Income Tax 139 2% 181 2%
    Net Profit 270 3% 352 3%

    Increase in Net
    profit due to Level
    Production
    Level Production Column1
    1994 % of Sales
    10000 100%
    6510 65%
    3490 35%
    2515 25% Overhead savings, orderly production and high storage and handling cost
    95 1%
    28 0%
    908 9%
    309 3%
    599 6%

    247
    Jan Feb Mar Apr May Jun Jul
    LEVEL PRODUCTION
    Net Sales 120 140 160 140 140 140 160
    Cost of Goods Sold 78 91 104 91 91 91 104

    Gross Profit 42 49 56 49 49 49 56

    Operating Expenses 210 210 210 210 210 210 210


    Interest Expense 7 7 7 7 7 7 7
    Interest Income 2 4 5 4 3 3 2

    PBT -166 -157 -149 -157 -158 -158 -152


    34% Income Tax -56 -53 -51 -53 -54 -54 -52

    Net Profit -109 -103 -98 -103 -104 -104 -100

    NORMAL PRODUCTION
    Net Sales 120 140 160 140 140 140 160
    Cost of Goods Sold 84 98 112 98 98 98 112

    Gross Profit 36 42 48 42 42 42 48

    Operating Expenses 200 200 200 200 200 200 200


    Interest Expense 7 7 7 7 7 7 7
    Interest Income 2 4 5 4 3 3 2

    PBT -169 -161 -154 -161 -162 -162 -157


    Income Tax -57 -55 -52 -55 -55 -55 -53

    Net Profit -112 -106 -102 -106 -107 -107 -104


    Aug Sep Oct Nov Dec Total

    1620 1840 2140 2285 1115 10000


    1055 1198 1393 1488 726 6510

    565 642 747 797 389 3490

    210 210 210 210 210 2515


    7 7 7 7 7 85
    1 1 1 1 1 28

    357 434 538 589 181 918


    121 147 183 200 61 341
    -237
    235 286 355 389 119 577

    1620 1840 2140 2285 1115 10000


    1134 1288 1498 1600 781 7000

    486 552 642 686 335 3000

    200 200 200 200 200 2400


    7 7 7 7 7 85
    1 1 1 1 1 28

    280 346 436 479 128 543


    95 118 148 163 44 185

    185 228 288 316 85 358

    You might also like