2010-06-06_202600_ginger - Solutions Guide: Please do not...

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Solutions Guide: Please do not present as your own. I sometimes post solutions that are totally mine, from the book’s solutions manual, or a mix of my work and the books solutions manual. But this is only meant as a solutions guide for you to answer the problem on your own. I recommend doing this with any content you buy online whether from me or from someone else. EXERCISE 21 LO.4 (Target costing) Taurus Tools has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product: Expected Price Year Expected Volume per Unit 1 38,000 units $19 2 48,000 units 18 3 90,000 units 16 4 40, 000 units 12 If the firm desires to net $4.50 per unit in profit over the life of the product, what is the target cost to produce the new utensil? Life-cycle revenue: Year 1 38,000 x $19 $ 722,000 Year 2 48,000 x 18 864,000 Year 3 90,000 x 16 1,440,000 Year 4 40,000 x 12 480,000 Total 216,000 3,506,000 Required profit 216,000 × $4.50 (972,000 ) Total target cost $2,534,000 Target cost per unit: $2,534,000 ÷ 216,000 = $11.73 Exercise 29 LO.5 (JIT implementation) William Manufacturing Company began implementing a just-in-time inventory system several months ago. The production and purchasing managers, however, have not seen any dramatic improvements in throughput. They have decided that the problems are related to their suppliers. The company’s three suppliers seem to send the wrong materials at the wrong times. Prepare a discussion of the problems that might exist in this situation. Be certain to address the following items: internal and external communication; possible engineering changes and their impacts; number, quality, and location of suppliers; and length of system implementation. JIT requires close relations and communications with suppliers. Preferably, there should be a few, well-cultivated suppliers who are "trained" to know precisely your inventory needs and who understand the critical requirement of meeting your just-in-time operation schedule. Further, they should be made aware that they will be dismissed for defective or inappropriate products or service or for failure to meet delivery schedules. All of the above requires continual close communications between the vendor and the JIT producer. In this case, William Manufacturing needs to consider whether some or all of the responsibility rests with the company itself. Have the vendors been properly "trained" and made precisely aware of product and timing needs? Have the vendors been chosen with the expertise, facilities and delivery capability to service William's requirements? Do William's personnel know
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exactly what the needs are, and are those needs fairly stable? If, for example, William has frequent engineering changes because of inadequate product development, supplier compliance is hampered. Finally, JIT systems cannot be fully and effectively implemented in a few
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This note was uploaded on 01/10/2012 for the course ACC 499 taught by Professor M.pedergrass during the Spring '10 term at Strayer.

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2010-06-06_202600_ginger - Solutions Guide: Please do not...

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