Capsim quizzes
When the forecast is less than the total number of units available for sale, the proforma income statement will display an inventory carrying cost. The simulation charges an inventory carrying cost of __% 15% 10% 12% 20%
12%
Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in this and all future rounds. Looking at the Round 5 Courier for Erie, last year's sales were $205,656,999. Assuming similar sales for next year, the 1.7% increase in demand will provide $3,496,169 of additional revenue. With the overall contribution margin of 39%, this will add $1,363,506 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment rounded to the nearest month? 24 Months 9 Months TQM investments have no significant financial impact 18 Months
18 Months $2,000,000 investment divided by $1,363,506 to the bottom line = 1.467 years multiplied by 12 months/year = 17.6 months rounded to 18.
Sensors priced $1.00 above or below the segment range lose about how much of their customer survey score? 5% 15% 20% 30% 10%
20%
Banks are willing to loan current debt up to __% of the company's accounts receivable plus __% of this year's Inventory. 80% and 20% 20% and 80% 50% and 25% 75% and 50%
75% and 50%
Bondholders are willing to lend amounts up to __% of the value of the company's plant and equipment. 80% 75% 50% 20%
80%
Increasing promotion budgets eventually result in diminishing returns. The first one million dollars typically results in a 26% increase in awareness, while the second million results in adding another 18%, and the third million another 5%.Erie's product Eat currently has an awareness of 84%. While an important product for Erie, Eat's promotion budget will be reduced to one million dollars for the upcoming year. Assuming that Eat loses one-third of its awareness each year, what will Eat's awareness level be next year? 82% 58% 84% 95%
84 minus one-third (28) plus 26 = 82
The December Customer Survey Score reports what customers thought about your product. Assuming it does not run out of inventory, a sensor with the higher score will outsell a sensor with a lower score. True False
True
What is Chester's free cash flow? $32,093(000) $23,758(000) $323(000) $16,208(000)
Free cashflow is cash flow from operations minus money spent on plant improvements (capital expenditures). Chester's cash flow from operations is $16,208(000). Chester spent $15,885(000) on plant improvements. Answer is $323(000)
Looking at Andrew's balance sheet, suppose they want to increase its leverage to 3.0 by issuing bonds to purchase plant and equipment. How much additional plant and equipment (in 000's) could it buy? $143,826 $30,026 $47,601 $67,959 none of the above
Leverage = Assets/Equity 3.0 = Unknown / $47,942 Unknown = $143,826 (new asset level) New assets amount minus previous assets amount $143,826 - $96,225 = $47,601 additional assets to buy
What is the measure for product reliability? a Customer survey scores b MTBF ( Mean Time Before Failure) c Price d All the above
b MTBF ( Mean Time Before Failure)
Market segments are named for: a The customer's geographic region b The customer's end product c The manufacturer's geographic region d The customer's top concern
d. The customer's top concern
How much do segment prices fall each Year? $.75 $.50 Prices remain constant in each segment. Segment prices vary depending upon relative market demand. $1.00
$.50
Assuming no brokerage fees, calculate the amount of cash needed to retire Baldwin's 12.0S2023 bond early. Refer to the Bond Market Summary in the Courier. $17,675,700 $16,919,500 $2,280,000 $21,280,000
$16,919,500 Multiply the face value times the closing price divided by 100. In this instance, Baldwin would be retiring the bond at a discount. If the closing price were greater than 100, then Baldwin would be retiring the bond at a premium
What is the forecasted demand for the traditional segment in year 8? 13,679(000) 21,714(000) 8,489(000) 14,937(000)
13,679(000) Refer to the Situation Analysis Demand Analysis Chart or do the calculation: 11,471 x 1.092 x 1.092 x 1.092 for years 6,7, and 8.
What is Andrew's days of working capital? (rounded to nearest the whole number) Use the working capital calculated in the previous question and the Income Statement Survey. 90 35 65 25 50
Days of working capital = working capital / (sales / 365) The top line of the Income Statement (P&L) gives you your sales. 13,775 / (101,073 / 365) = 49.7 rounded to 50 days
On the Income Statement, which can be best defined as a variable cost? Direct Labor Expense Promotion Expense R&D Expense Depreciation Expense
Direct Labor Expense Total variable costs consist of direct labor, direct material, and inventory carrying costs.
Currently Baker is charged $3,133,000 Depreciation on the Income Statement of Baldwin. Baldwin plans to increase this depreciation to take advantage of changes in the tax code. Will this? Increase Net Cash from Operations on the Cash Flow Statement Decrease Net Cash from Operations on the Cash Flow Statement Have no impact on the Net Cash from Operations as Depreciation appears in both the Cash Flow and Income Statements only impact the Balance Sheet
Increase Net Cash from Operations on the Cash Flow Statement
Andrews ended the year carrying $7,617,000 worth of inventory. Had they sold all their entire inventory at their current prices, how much more contribution dollars would it have brought to Andrews? Use the Production Information in the Capstone Courier. $23,205,830 $5,502,925 $7,617,000 $4,981,402
Multiply the units in inventory times the selling price less the (labor and material costs).
The Andrews company will sell 100 units (x1,000) of capacity from their Acre product line. Each unit of capacity is worth $6 plus $4 per automation rating. The Andrews company will sell the capacity for 35 % off. How much do they receive when the capacity is sold? $3,000,000 $3,400,000 $2,210,000 $1,950,000
Multiply100,000 X $6 + ($4X6)= $3,000,000. $3,000,000 discounted by 35% = $1,950,000. $3,000,000 x .35 = $1,050,000. $3,000,000 - $1,050,000 = $1,950,000 or $3,000,000 X .65 = $1,950,000.
Refer to the Industry Conditions Report. Which market places the most importance in high reliability and cutting edge performance technology? Traditional Low End High End Size Performance
Performance
On the Income Statement Survey, which of the following would be classified as a fixed cost (sometimes called a period cost)? Labor Cost Material Cost Promotion Cost Income Tax
Promotion Cost refer to an annual report
Andrew's product manager is considering lowering the price of Acre by $2.50 and wants to know what the impact will be on the product's contribution margin. Assuming no inventory carrying costs, what will Acre's contribution margin be if the price is lowered? 37.56% 11.55% 23.25% 27.81% 43.44%
Refer to the production Analysis Acre is currently priced at $18.50. Lowering the selling price by $2.50 leaves $16.00. $16.00 minus material cost of $4.51 and labor cost of $7.04 leaves a contribution of $4.45. $4.45 divided by $16.00 equals a contribution % of 27.81.
Each circle on the Perceptual Map represents: a A market segment b A group of like-minded customers c Products d Both a and b
d Both a and b
The strategy of a Broad Cost Leader Centers on the High End, Traditional, and Low End Segments Maintains a presence in all segments of the market. Maintains its prices above average. Maintains a presence in only the Traditional and Low End Segments
maintains a presence in all segments of the market
Once your product has achieved 100% awareness, you can scale back the product's promotion budget to what dollar amount and still maintain 100% awareness? 50% none of the above $0 $3,000(000) $1,400(000)
$1,400(000)
What is the working capital of Andrews (in 000's)? Refer to Capstone Courier Balance Sheet Survey. $13,775 $2,434 $5,175 $3,434 $6,434
$13,775 Working capital is current assets minus current liabilities. Refer to Andrew's balance sheet. Current assets include cash, accounts receivable and inventory. Current liabilities include accounts payable and current debt. 20,358 - (6583 + 0) = 13,775
The Chester team has just purchased $15,885,000 of plant and equipment that has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and equipment can be salvaged for $1,588,500 (1/10th of its original cost). What will be the book value of this purchase (excluding all other Plant and Equipment) after its first year of use? $12,708,000 $14,296,500 $14,931,900 $13,343,400
$15,885,888 cost of assett Less $1,588,500 salvage value = $14,296,500 to depreciate over 15 years $14,296.500/ 15 = $953,100 depreciation each year. $15,885,000 less the first year of $953,100= $14,931,900 book value at the end of the first year. See page 20 of the Courier
If Andrews were to buy back all of its shares outstanding at its current price, how much would it cost Andrews Corporation excluding brokerage fees? $222 Million $202 Million $115 Million $52.42 Million
$222 Million Multiply shares outstanding times the closing price
Andrews currently has $3,434 (000) in cash. Assuming this year's cash from operations will remain unchanged, and the most capital the company can raise is $15,000 (000), what activity exposes the company to the most risk of being issued and emergency loan? Retiring the oldest bond Purchasing $30,000 (000) worth of plant and equipment Getting rid of all the inventory Issuing a $2.00 dividend
$3,434 cash on hand (see balance sheet) plus $6,434 cash from operations (see cash flow statement) plus $15,000 they can raise equals $24,868 cash on hand. The $30,000 purchase will decrease cash below $24,868 causing an emergency loan. The $2.00 dividend will decrease cash by only $4,400 (see the stocks and bonds report) Getting rid of inventory increases cash Retiring the oldest bond will decrease cash by only $6,950 (see the stocks and bonds report)
In the month of March the Erie Corporation received and delivered orders of 172,980 units at a price of $19.49 for revenue of $3.371mil for their product Ebb. Erie uses the accrual method of accounting and offers 30 day credit terms. By the end of May, Erie had collected payments of $2.450mil for the March deliveries. How much of the collected $2.450mil should Erie show on the March 31st income statement and how much on the May 31st income statement? $0 in March; $2.45 Mil in May $3.371 Mil in March; $0 in May $1.8655Mil in March: $1.6855 Mil in May $.92 Mil March; $2.45 Mil in May
$3.371 Mil in March; $0 in May Capsim uses accural accounting and sales are realized when shipped. All the revenue ($3.371mil) and CGS are booked on the March P&L, regardless of when the customer pays. A receivable goes on the balance sheet when shipped and when payment is received the receivable is decreased on the balance sheet
What would Baldwin Corporation's market capitalization be if the current stock price rose 10%? $80,400,000 $52,964,000 $18,360,000 $50,042,703
$50,042,703 Multiply the closing price plus 10% times shares outstanding.
The Baldwin Company currently has the following balances in their equity accounts: Common stock: $22,860 Retained earnings: $27,391 Suppose next year the Baldwin Company generates $46,300 in Net Profit and pays $16,000 in dividends. What will Baldwin's ending balance in retained earnings be next year? $70,912 $54,912 $99,264 $83,264 $57,691
$57,691 Add profits and subtract dividends to retained earnings.
Refer to the Production Information in the Courier. Andrews has decided to become a niche differentiator and eliminate its low and traditional products by selling all their capacities and inventories. Andrews plans to increase the capacity of all its remaining products by 10%. What will be the total capacity (both shifts) of all Andrews remaining products? 10,996 5,998 5,498 8,940
948+900+900+800+800+650 X 2 X 1.1 = 10,996
Demand is created through meeting customer buying criteria, credit terms, awareness (promotion) and accessibility (distribution). According to the December Customer Survey, which of these products was the most competitive at the end of the year in the low end market? Acre Bead Ebb Fast Bottle
Acre has the highest December customer survey score of 19.
Currently Erie is paying a dividend of $6.98. If this dividend were raised $.50, given its current stock price of $117.28, what would be the dividend yield? 2.3% 6.4% 14.4% 15.4%
Add $.50 to the dividend of $6.98 to equal $7.48. Divide $7.48 by the closing price of $117.28 to get a dividend yield of 6.4%
Select what will be the most correct calculation of retained earnings for next year. Add next year's dividends to this year's retained earnings. Add next year's gross income to this year's retained earnings None of the answers are correct Add next year's net income minus dividends paid to this year's retained earnings.
Add next year's net income minus dividends paid to this year's retained earnings. Retained earnings increase with profits. Retained earnings decrease with losses. Retained earnings decrease when dividends are paid.
This year Andrews achieved an ROE of 43.4%. Suppose the Board of Directors of Andrews mandates that management take measures to increase financial Leverage (=Assets/Equity) next year. Assuming Sales, Profits, and Assets remain the same next year, what effect would you expect this new Leverage policy will have on Andrew's ROE? Andrew's ROE will decrease. Andrew's ROE will increase. Andrew's ROE will remain the same None of the above
Andrew's ROE will increase Leverage =Assets/Equity Return on Sales X Asset Turnover X Leverage = Return on Equity. Increasing Leverage will increase ROE
Rank the following companies from high to low cumulative profit, (in descending order, 1=highest, 6=lowest). Click on the Courier link in the instructions Andrews Baldwin Chester Digby Erie Ferris
Andrews 2 Baldwin 4 Chester 5 Digby 6 Erie 1 Ferris 3
Midyear on July 31st, Baldwin's balance sheet reported the following: Total Assets of $135.514 million Total Common Stock of $23.757 million Cash of $36.478 million Retained Earnings of $42.935 million What were Baldwin's total liabilities? $68.822 Million $105.309 Million $67.175 Milliom $32.335 Million
Assets = Liabilities + Equity Look at a balance sheet. Equity consists of common stock and retained earnings $135.514= unknown liabilities + ($23.757+$42.935) unknown liabilities = $68.822 million
Using the results from the previous question, what will Andrew's new liabilities be? $48,283 $47,601 $95,884 $89,301
Assets always equal Liabilities plus Equity. $143,826 = Unknown Liabilities + $47,942 (Equity) Answer is $95,884 or $47,601 (New Liabilities) + $48,283 (Old Liabilities) = $95,884
Andrews has negotiated a new labor contract that will affect the cost of their product Able. Refer to the Production Analysis. Labor costs will go up from $7.49 to $7.99 per unit. Andrews plans to pass on half the labor increase to their customers. Assume all other period and variable costs remain the same. The production report shows the selling price will increase from $28.00 to $28.25. Able's material costs remain the same at $11.59. Assume Able's period costs are identical to Baldwin's product Baker at $5,192 as found on the annual report. How many units of Able would need to be sold next round to break even on the product Able? Hint: BE= Period Costs/(Selling Price Per Unit minusVariable Costs per Unit) 599 1050 No answer text provided. 450
BE= Period Costs/ (Selling Price per Unit minus Variable Costs per Unit) BE= 5,192/ [28.25-(7.99+11.59)] BE = 5,192/8.67 Round to 599
Refer to Digby's Balance Sheet. Digby is expecting $3,000,000 in net income next year. Assuming no dividends are paid and no stock is issued or bought back, what will be the book value of Digby's stock next year? Digby has 2,000,000 shares outstanding. There is not enough information to answer this question $11.82 $13.32 $14.46 $21.82
Book value is total equity divided by shares outstanding. $23,633 + $3,000 = $26,633 total equity /2,000 shares outstanding = $13.32
The customer buying criteria tables rank the customer criteria within each segment. Which remain the same year after year? Reliability Age Ideal Position Price Both Age and Reliability (MTBF)
Both Age and Reliability (MTBF)
The finance department must raise funds to finance all the company activities.Check all that are sources of acquiring capital. Current Debt Profits Bond Issues (long term debt) Stock Issues Retiring Stock (Stock buy Back) Dividends
Current Debt Profits Bond Issues (long term debt) Stock Issues
Recruit spend in the HR screen is the extra amount budgeted per worker to recruit high caliber workers. The higher the budget the better the worker, resulting in higher Productivity Index and lower Turnover Rate.Your entry is added to the base amount of $1,000 per new employee. Refer to the Human Resources Summary in the Courier. How much was Digby's recruiting spend per employee? $0 $570 $4,000 $6,000
Digby spent $6,000. Digby added $5,000 to $1,000 base. Check this number by dividing the total recruiting of $570 (000) by 95 new employees = $6,000.
The Andrews company has just issued $4,000(000) in dividends last year. The effect of this payment on the balance sheet is: Net profit will decrease $4,000(000) Liabilities will increase $4,000,(000) Equity will decrease $4,000,(000) Expenses will increase $4,000(000)
Equity will decrease $4,000,(000) Total equity includes common stock and retained earnings. Retained earnings go up with profits, down with losses, and down with paying out dividends.
Which description best fits Erie in your industry? Refer to the Market Share Report in the Courier. --A differentiator competes through good designs, high awareness, and easy accessibility -- A cost leader competes on price by reducing costs and passing the savings to customers --A broad player competes an all parts of the market. --A niche player competes in selected parts of the market. Erie is a niche differentiator Erie is a broad cost leader Erie is a broad differentiator Erie is a niche cost leader
Erie is not in all markets, therefore a niche player. Erie competes mainly in the low and traditional markets, therefore a cost leader.
Which mission statement best represents the Erie company? Innovation meets revolution. We create value for our customers through breakthrough designs that lead to unique high-performance products. Providing value to our customers is why we get up in the morning. We accomplish this by offering products at a low price our customers can afford across a wide variety of market segments. Lasting innovation is our motivation. We build premium products that are elegantly designed to meet the needs of a variety of market segments. Cosistency and affordability are our goals. Our central mission is to offer dependable low-price products that our customers can count on.
Erie's strategy is that of a niche cost leader. Refer to the market share report. Erie left the three high-end markets and is focused only in the traditional and low-end segments. The Production Analysis can also give clues as to a company's strategy
The five market segments learned in the Team Member Guide are the following: None of the above High Beginning, Low Beginning, Performance, Size and Medium Low Traditional, Low End, High End, Performance, and Size Performance, Size, Reliability, Price, Traditional, and Low End.
Traditional, Low End, High End, Performance, and Size
Products are allowed to move from one assembly lint to another. True False
False
Whatever figure you enter in the "Your Sales Forecast" cell on the Marketing screen will automatically be produced. True False
False
Which company has the least amount of free cash flow? Erie Baldwin Andrews Ferris Chester Digby
Ferris had the least amount. + $1,577,000 cash from operations +($3,900,000) cash spent on plant and equipment = ($2,323,000) in negative cash flow
Which description best fits Ferris in your industry? For clarity: -- A differentiator competes through good designs, high awareness, and easy accessibility. -- A cost leader competes on price by reducing costs and passing the savings to customers. -- A broad player competes in all parts of the market. -- A niche player competes on selected parts of the market Ferris in a niche cost leader (low technology) Ferris is a broad cost leader Ferris is a niche differentiator (high technology) Ferris is a broad differentiator
Ferris is a niche differentiator (high technology) Ferris is not in all five markets, therefore is a niche player. Ferris is mainly in the three high technology markets, therefore a niche differentiator
Refer to Baldwin's annual report.Rank Baldwin's following costs to their percentage of sales for your corporation (largest =1, smallest =3). Variable Cost Period Cost Interest Expense
Go to Baldwin's annual report income statement Variable costs are the highest at 69.6%. Period costs are next highest at 15.6%. Interest costs are the lowest at 6.5%.
Erie is downsizing the size of its workforce by 10% (to the nearest person) next year from various strategic initiatives. How much will the company pay in separation costs if each worker receives $5,000.00 when separated> $410,000 $115,000 $805,000 $5,000
Go to the HR report. Erie has 823 employees. 10% reduction would be 82.3 rounded to the nearest whole person of 82. 82 multiplied by $5,000 equals $410,000
Select all the following statements that are true three years from now. (Due to rounding, select an answer if within a few units). This is a multiple answer question. No answer text provided. The high end segment will demand 5,489 units The size segment will demand 7,609 units The performance segment will demand 8,125 units
High end growth rate is 16.2% Total demand is 5,410 x 1.162 x 1.162 x 1.162 x 1.162= 9,863 Performance growth rate is 19.8% Total demand is 4,726 x 1.198 x 1.198 x 1.198 x 1.198x1.162=8,125 Correct Size growth rate is 18.3% Total demand is 4,596 x 1.183 x 1.183 x 1.183 x 1.183x1.183=7,609 Correct
Assets always equal liabilities plus equity. True False
True
Andrews is currently charged $7,587 (000) depreciation in the Income Statement. Andrews is planning for an increase in depreciation next round. On the financial statements of Andrews will this? Decrease net cash from operations on the Cash Flow Statement Just impact the Balance Sheet. Have no impact on the net cash from operations as depreciation appears in both Cash Flow and the Income Statement. Increase net cash from operations on the Cash Flow Statement
Increase net cash from operations on the Cash Flow Statement
Refer to Erie's cash flow statement which shows what happens in the cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added and uses of cash are subtracted). Please answer which of the following is true when Erie repurchased some of its common stock. It is a source of cash and will be shown in the investing section as an addition It is a use of cash and will be shown in the investing section as a subtraction It is a use of cash and will be shown in the financing section as a subtraction. It is a source of cash and will be shown in the financing section as an addition
It is a use of cash and will be shown in the financing section as a subtraction Erie repurchased $302 worth of common stock and it is shown as a negative in the cash flow from financing activities section.
In order to sell a product at a profit, the product must be priced higher than the total costs of what it costs you to build the unit, plus period expenses and plus overhead. At the end of the year, Andrews had a traditional product Able. Use the Capstone Courier production analysis to find Able's production (unit) cost (labor + materials). Exclude possible inventory carrying costs. Assume period expenses and overhead total ½ of their production costs. What is the minimum price the product could have been sold to cover the unit cost, period expenses, and overhead? $20.00 $9.54 $28.62 $30.00 $19.05
Material costs are $11.59 and labor costs are $7.49 for a total of $19.08. The question says that period and overhead expenses are 1/2 which is $9.54. $19.08 plus $9.54 = $28.62. This is the minimum price the product could be sold to cover those costs.
Before finalizing finance decisions, decisions must be made in all other functional areas first. Otherwise, how will the finance manager know what the financial projections and demands for capital look like? True False
True
Customers ignore reliability above the expected range. True False
True
Adam is a product of the Andrews Company which is primarily in the High-End Segment, but is also sold in another segment. Andrews starts to create their sales forecast by assuming all policies (R&D, Marketing, and Production) for all competitors are equal this year over last. For this question assume that all 1,015 units of Adam are sold in the High-End segment. If the competitive environment remains unchanged what will Adam's demand be next year (in 000's)? 1,179 1,923 2,500 2,000
Multiply the units times the High-End segment growth rate of 16.2% 1,015 times 1.162 = 1,179
Review the Market Share Report to determine Digby's current strategy. From the following list, select the top five sources of competitive advantage that Digby would be most likely to pursue. Offer attractive credit terms Increase demand through TQM iniatives Reduce labor costs through training and recruitment Seek high automation levels Seek the lowest price in their target market while maintaining a competitive contribution margin Add additional products Seek excellent product designs, high awareness, and high accessibility Reduce costs through TQM iniatives Seek high plant utilization, even if it risks occasional stock outs Accept lower plant utilization and higher capacities to insuce sufficient capacity is available to meet demand
Offer attractive credit terms Increase demand through TQM iniatives Seek excellent product designs, high awareness, and high accessibility Reduce costs through TQM iniatives Seek high plant utilization, even if it risks occasional stock outs
Refer to Baldwin's annual report. Of all of Baldwin's products, which earned the lowest direct labor as a percentage of its sales? Base Bottle Bid Baker Bead Bold Buddy
Refer to Baldwin's annual report. Divide direct labor by sales. Base has the lowest direct labor as a percentage of sales at 24.3%.
Of all of Baldwin Corporation's products, which earned the highest net margin as a percent of sales? Scroll down to Baldwin's annual report. Bottle Bead Baker Base Buddy Bid Bold
Refer to Baldwin's annual report. Bead was the highest at 27.3%. Divide net margin dollars by the sales dollars for each product.
Last year Baldwin paid their workers $26.81. How much will the be paying them two rounds in the future? Refer to the Human Resources Summary in the Courier. $31.04 $27.81 $32.59 $29.56
Refer to the HR Report. The wage escalator is 5% $26.81 x 1.05 x1.05 = $29.56.
Last year Andrews paid their workers $26.81 per hour. Next year Andrews plans to include an additional performance bonus of 0.5% in its compensation plan .This incentive will be provided in addition to the annual raise, if productivity goals are reached. Assuming the goals are reached, how much will Andrews be paying their employees per hour next round? $32.59 $28.28 $29.56 $27.81
Refer to the HR report. The wage escalator is 5% with an additional bonus of .5%. $26.81 x 1.055 = $28.28
Which company has the least efficient (highest) SG&A/Sales ratio? Chester Andrews Digby Erie Baldwin Ferris
Refer to the Income Statement Survey. Digby has the highest SG&A cost as a percent to sales of 21.9%.
Refer to the HR Reports in quiz Capstone Courier. Through past investments in recruiting and training, Baldwin has obtained a productivity index of 1.13 This means that Baldwin's labor costs would be increased by 13% if it did not have these productivity improvements. This is a competitive advantage that Baldwin can sustain or even widen further if its competitors have no HR initiatives. On the Income Statement in Baldwin's Annual Report, Baldwin had labor costs of $66,119,000. How much did Baldwin's productivity improvements save it in direct labor costs last year? $7,406,940 $1,300,000 $8,595,470 $1,357,032
Refer to the labor cost on the annual report income statement. Multiply the direct labor of $66,119,000 times the productivity improvement of .13 to equal $8,595,470.
Last year Company X increased their equity. The previous year their equity was $61,356,000. Last year it increased to $77,172,000. What are the causes of changes in equity? Check all that apply.This is a multiple answer question. a change in cash of $3,580,000 Depreciation of $9,227,000 a change of short-term debt of $13,900,000 Sales (issue) of $5,000,000 worth of stock a change in inventory of $3,908,000 an accounts payable change of $2,087,000 Profits of $13,837,000 a bond issue of $10,000,000 a change of plant and equipment of 436,300,000 Purchase (retire) of $2,000,000 worth of stock a dividend payment of $1,021,000
Sales (issue) of $5,000,000 worth of stock Profits of $13,837,000 Purchase (retire) of $2,000,000 worth of stock a dividend payment of $1,021,000 You can check your answer by doing the additions and subtractions below. Year to year equity increase of $15,816,000 + Profits of $13,837,000+ Issue stock of $5,000,000- Retire stock of -$2,000,000- Dividend of $-$1,021,000 Totals $15,816,000
The Digby Company will continue to train their existing workforce at their current level to help reduce turnover and improve productivity next year. Employee training costs $20 per hour. How much would their training costs per employee be to the nearest dollar? Refer to the HR report in the Capstone Courier. $1,600 $1,000 $800 $1,420
See the HR/TQM Report. $20 per hour times 80 hours equals $1,600
How do you discontinue a product without selling it at a low price? Sell all but one unit of capacity. Reduce the forecast to zero. Reduce the forecast to on-hand inventory and discontinue the production. Sell all the capacity.
Sell all but one unit of capacity.
Recruit spend in the HR screen is the extra amount budgeted per worker to recruit high caliber workers. The higher the budget the better the worker, resulting in higher Productivity Index and lower Turnover Rate.Your recruiting spend is added to the base amount of $1,000 per new employee. Refer to the Human Resources Summary in the Courier. How much was Digby's recruiting spend to cover the replacement of just the employees Digby turns over? $0 $96,000 $9,120 $6,000
Take Digby's turnover rate of 6.8% and multiply by the needed complement of 233 and that equals 15.84 employees. Round to 16 and multiply times $6,000 spent per new hire and that equals $96,000 Take Digby's turnover rate of 6.8% and multiply by the needed complement of 233 and that equals 15.84 employees. Round to 16 and multiply times $6,000 spent per new hire and that equals $96,000
According to the information found on the production analysis of the Capstone Courier 5.2.C.xlsx., Andrews sold 3,755 units of Acre. Assuming that Acre maintains constant market share, all the units are sold in the low-end market segment and the growth rate remains the same at 11.7%, how many years will it take before Acre will not be able to meet future demand unless the company adds production capacity. Exclude any existing inventory. 4 years 3 years 1 year 2 years
Two years is correct. Andrews sold 3,755 units of Acre. The low-end marketgrowth rate is 11.7%. Therefore Andrews will need to make 3,755 X 1.117 or 4,194 units. The Acre line has capacity of 2,150 x 2 or 4,300. That's enough capacity for next year. However, two years from now Andrews will need another 11.7% capacity or 4,194 X 1.117 or 4,685 units of production.
Chester has a leverage of 1.91. This means that (assume leverage is calculated as assets/equity) a $1.91 of assets is funded with $1.00 of equity and $.91 of debt. b $1.91 of assets is funded with $1.00 of debt and $.91 of equity c Assets are funded with 91% of equity. d Assets are funded with 91% of debt.
a $1.91 of assets is funded with $1.00 of equity and $.91 of debt. Leverage = assets/equity
When the simulation begins, each company will begin with a management team that takes the reins of,,, a $100 million dollar company with four product lines a $140 million dollar company with five product lines a $80 million dollar company with four product lines a $100 million dollar company with five product lines a $40 million dollar company with five product lines
a $100 million dollar company with five product lines
What is the current ratio of Chester? Use the results of the Balance Sheet Survey Below. a 1.73 b 3.09 c 1.5 d 1.9
a 1.73 Current Ratio = Current Assets/Current Liabilities
Promotion and Sales expenditures offer rapidly diminishing returns above what levels? a About $3 million each b $500K each c About $2 million combined d $500K combined
a About $3 million each
In addition to expecting decreasing Size and increasing Performance of the sensors, what other demands do Capstone customers place on the market? a Decreasing price b Increasing reliability c Demands for exclusive deals d All the above
a Decreasing price
Prices are established by which department? a Marketing b Research and Development c Production d Finance
a Marketing
Inside each fine cut circle, a segments have an ideal spot where demand is at its highest. b they will be carried on the books based in a LIFO accounting system. c None of the above. d product segments strive to be in the center.
a segments have an ideal spot where demand is at its highest.
Aft's product manager wishes to achieve a contribution margin on 35%. Given that Aft is currently priced at $35.00, what would they need to limit the labor and material costs to? Assume no inventory carrying costs. a $23.00 b $22.75 c $24.50 d $21.00
b $22.75 Contribution margin is calculated by subtracting variable costs from sales.Variable costs include labor, material, and inventory carrying costs. The contribution dollars of a $35.00 product would need to be 35% or $12.25. $35.00-$12.25 would result in a labor and material cost of $22.75. A product with a contribution margin of 35% would have variable costs of 65%. The answer can also be answered by multiplying $35 x 65% = $22.75
How many assembly lines are in the simulation? a One line shared by all companies b At the start of the simulation production has five lines with room for three more c none of the above d One line per company
b At the start of the simulation production has five lines with room for three more
Over time, what will happen on the Perceptual Map to represent changes in the market segment customer's expectations regarding Size and Performance? a Circles remain stationary, representing customer's expectations for no changes in the technology of the electronic sensors. b Circles move towards the bottom right corner as customers demand that the sensors decrease in Size and increase in Performance c Products will move automatically as the circles move
b Circles move towards the bottom right corner as customers demand that the sensors decrease in Size and increase in Performance c Products will move auto
Able's product manager feels that Able continues to perform well in the market. However, a competing product is coming on strong and is looking to take over as market share leader in the segment. Without sacrificing contribution margin, what can the Able product manager do in order to improve upon Able to increase potential demand. a Reposition Able to make it even smaller and higher performing b Increase the promotion budget to gain awareness. c Increase MTBF by 2,000 d Lower the selling price since it is the second most important buying criteria
b Increase the promotion budget to gain awareness. Contribution margin is calculated by subtracting variable costs from sales. Variable costs include labor, material, and inventory carrying costs. Lowering price would lower sales and the contribution margin. Increasing MTBF and repositioning Able would increase material costs. Promotion expenses are period (or fixed costs) costs that do not affect the contribution margin. Review the income statement in the annual report
Before you can address your customers' continuous demand for lower prices, what must you do? a Issue Stock b Reduce Costs c Issue Bonds d Retire Bonds
b Reduce Costs
Baldwin has asset turnover of 1.4% (Turnover = Sales/Total Assets) This means: a For every $1.40 of profit the company has an investment of $1.00 in assets b The company is generating $1.40 for every $1.00 of assets c There are sales of $1.40 for every dollar of profit. d There are of $8 for every dollar of profit
b The company is generating $1.40 for every $1.00 of assets In the Capstone spread sheet, go to Proformas/Ratios and position your mouse over the Asset Turnover information link.
Chester Corporation uses the accrual method of accounting. When it sells its first unit of inventory for its product Coat during the year, it also matched which of these expenses with that sale? a the depreciation on the Coat product line b the labor and material costs of the Coat product c the promotion budget for the product Coat d the R&D costs on the product Coat
b the labor and material costs of the Coat product
What is the lag time between purchase and use of new and/or additional plant and equipment. a 2 years b none c 1 year d 6 months
c 1 year
What is the minimum amount of time it takes to invent a new sensor? a 3 months b 6 months c 1 year at least d 2 years at least
c 1 year at least
In the marketing area, which expenditure drives customer awareness? a Price b MTBF c Promotion Budget d Sales Budget
c Promotion Budget
Review the DuPont Formula Value Chain in the Finance PowerPoint in week #2. This year Baldwin achieved an ROE of 8.5%. Suppose management takes measures that decrease Asset Turnover (Sales/Total Assets) next year. Assuming ROS, ROA, Leverage and Equity remain the same, what effect would you expect this action to have on Baldwin's ROE? a ROE will remain the same b None of the above c ROE will decrease d ROE will increase
c ROE will decrease ROS X Asset Turnover = ROA. ROA X Leverage = ROE. If any ratio goes up, ROE increases. If any ratio goes down, ROE decreases.
Of the five market segments, which three are more concerned about leading-edge technology within their respective segment expectations? a Size Segment, Peformance Segment, and Traditional Segment b Size Segment, Performance Segment, and Low End Segment c Size Segment, Performance Segment, and High End Segment d Low End Segment, Traditional Segment, and High End Segment
c Size Segment, Performance Segment, and High End Segment
From a marginal analysis perspective, what is the inventory carrying costs for Andrews if the company carries one additional unit of Agape in inventory at the end of the year? a $3.96 b $17.75 c $12.20 d $2.13
d $2.13 Inventory carrying costs are 12%. See page 23 of the Team Member Guide. Agape's cost of labor and material expenses are $5.55 + $12.20 = $17.75 X .12 = $2.13.
Our Competitive Intelligence Team reports that a waive of product liability lawsuits is likely to cause Digby to pull Dart off the market. Assume Digby scraps all the inventory and capacity. WIthout Digby's product Dart, how much can the industry produce in the High End market? Ignore current inventories. Refer to the production report below. Hint: capacity next round should be multiplied by two because there are two shifts. a 4,064 b 3,769 c 10,528 d 8,128
d 8,128 Add the capacities for the High End segment products. Multiply times two for the second shift. Do not include Dart's capacity.
Investments in plant automation and capacity increases will show up on the finance screen and in the proformas. What options are provided for funding investments in plant improvements? a You may use expected profits from sales (if sufficient to also cover operating costs) and sell-offs of existing plant capacity b You may issue stocks and 10-year bonds within limits c You may borrow short term funds from the bank (repayment required the following year d All of the above are options, however long-term financing bonds) and issuing stocks are a better match to invest in long-term assets such as plant improvements
d All of the above are options, however long-term financing bonds) and issuing stocks are a better match to invest in long-term assets such as plant improvements
If Baldwin issued an additional 1,000 shares of common stock, the effect on the balance sheet would be: a Expenses would increase by $21,290 b Equity would decrease by $21,290 c Retained earnings would increase by $21,290 d Equity would increase by $21,290
d Equity would increase by $21,290 Review a balance sheet. Annual reports show a more detailed balance sheet. Total equity includes retained earnings and common stock. Retained earnings go up or down based on profits or losses. Retained earnings also decrease if dividends are paid. Common stock goes up or down based on issuing or buying back stock. Baldwin's total equity will increase by $21.29 X 1,000 = $21,290
In the marketing area, which expenditure drives customer accessibility? a Price b MTBF c Promotion Budget d Sales Budget
d Sales Budget
Your R&D functional area controls which of the following product attributes: a Age, Size, Performance, and Price b Price, Awareness, Accessibility, and Age c Age, Size, Performance, and Awareness d Size, Performance, Age, and Reliability
d Size, Performance, Age, and Reliability
Erie has a ROS of .08. (ROS = Net Income/Sales). This means: a There are sales of $92.00 for every dollar of profit b For every $8 dollars of sales there is a profit of 1%. c There are sales of $8.00 for every dollar of profit. d There is an 8% profit on each dollar of sales.
d There is an 8% profit on each dollar of sales.
Last year your company built 1,500,000 units of the product Able and sold 1,450,000. After 14 months in R&D, a revision of the product Able is due out tomorrow. What will happen to the unsold inventory of 95,000 units of the "old" product Able? a They'll be expensed as an adjustment to income and disappear. b They'll compete for sales based on the product attributes they were built under before any of the new product Able is offered for sale. c They'll be carried on the books based on a LIFO accounting system d They'll be scrapped for 50 cents on the dollar e They'll be reworked free of charge to match the new specifications for the product Able.
e They'll be reworked free of charge to match the new specifications for the product Able.
Refer to the Industry Conditions Report. The Traditional segment's ideal spot is near the lower-right of its circle near the lower left of its circle near the center its circle near the upper-left corner of its circle
near the center its circle
Chester Corporation uses the accrual method of accounting. When it sells the fist unit of inventory for its product called Coat during the year, it also matches which of these expenses with that sale: the material and labor costs of the Coat product the promotion budget for the Coat product the R&D expenses on the Coat product the depreciation on the Coat product line
the material and labor costs of the Coat product