Day: April 26, 2018

Minor Changes?Big Risk, a Tale of Woe!
A large and very well known healthcare organization sported a very large mainframe infrastructure to run the software to support its patient care function. This consisted of billing, patient records, administrative software, and 150 applications to support general practice. Now, it is very common to receive upgrades continually for this software. This discussion question will be used to analyze the concept of risk and the need for planning strategies to minimize risks to the organization.

In this scenario, one particular upgrade, or, as Information Technology (IT) folks call it in the trade, code fix, created a significant problem that prompted a process change that made subsequent code fixes into mini-projects themselves. At this time, the primary actions around implementing these code fixes were cursory testing to make sure the software didn’t break the system and then coordinating a time to implement it into production (live environment). This code fix to the billing system was one of the many that came through.

The fix was implemented at midnight on a Tuesday and became a colossal failure. The billing system was so broken that workers were sent home for 3 days because there was no work for them. The estimated loss in revenues during this period of 3 days until the system could be brought back online exceeded $1 million dollars per day. The vendor was immediately involved, and the organization requested a fix for the fix.

As a new project analyst that started work 3 weeks prior to this event and being a very bright individual, you are instructed to spearhead the new fix coming to fix the system and to ensure that no future problems like this occur again.

What are your first steps? How would you plan to handle this upcoming fix? How would you plan for handling the potential risk with this planned fix?

Three friends who were in Senior position of mining Co.decided to form their own mining operation to process Pure Nickel. They decided to raise equity through Aim listing and a loan of $100M. They will transport the Nickel Ore to another location where the procesing will take place using the acid-leach method. Their is a growing demand in China and India but they are also face with other alternative products which have the same use as Nickel and are cheaper. They incurred cost for equipments and other start off assets and also made provisions for environmental damages which they anticipate and are being confronted by environmentalist who believe that the mining operation will be bad for the environment.
The expensenses of the operation is in dollars but they desire to receive payment in pund Sterling.
Questions:

1 Identify the key Operational, Currency, Inflation and Economic Risks associated with Company
2 Assess those risks and indicate how they can be managed.

Prepare a Cash Receipts Budget for the quarter ending June 30th, by month and quarter. You do not need a formal sales budget since the sales budget is above in the data.
2. Prepare a merchandise purchase budget by month and quarter. A merchandiser purchases in dollars. I have set up a formatted budget for you. You can see how I have made a few minor changes to Schedule 2 on page 356, which is a production budget which we are not preparing. Make sure you think about the numbers you use in the quarter column. I am specifically talking about how you handle beginning and ending inventory.
3. Prepare a Selling and Administrative Expense Budget, by month and quarter. My budget is a little bit different than the one in the text, because I used percentage of sales dollar.
4. Prepare a Cash Disbursements Budget, by month and quarter.
5. Prepare a cash budget showing the months and quarter. Use the format I have provided on the budget sheet.
Do not worry about a minimum cash balance or financing needs, since we are trying to develop a cash management plan.
6. Based on the quarterly cash budget you prepared, do you have any recommendations on cash management. Discuss the type of business and the cash flow problems a company in this industry might have. Type your answer on the budget worksheet , where I have set out the question.
7. Prepare a budgeted income statement for the quarter ending June 30, 20XX. You do not need to show monthly columns.
8. What do you think about the survivability of this business?
9. What if the company finds out the monthly rent will increase to $3,000, what budgets are effected? Why?
What is the New Net income(Loss)? If you have linked everything correctly, you should only have to change the monthly rent on this sheet to determine your answer to the questions asked.

Bio Doc Corporation is a biotech company based in Milpitas. It makes a cancer-treatment drug in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process. Bio Doc uses the weighted-average method of process costing. The following information for July 2011 is available.

Physical Direct Conversion
Units Materials Costs
Work in process, July 1 8,500a 8,500 1,700
Started during July 35,000
Completed and transferred out during July
33,000 33,000 33,000
Work in process, July 31 10,500b 10,500 6,300

Degree of completion: direct materials, 100%; conversion costs, 20%.
Degree of completion: direct materials, 100%; conversion costs, 60%.

Total Costs for July 2008
Work in process, beginning $63,100
Direct materials 45,510
Conversion costs $108,610
Direct materials added during July 284,900
Conversion costs added during July 485,040
Total costs to account for $878,550

1. Calculate cost per equivalent unit for direct materials and conversion costs.
2. Summarize total costs to account for, and assign total costs to units completed (and transferred out) and to units in ending work in process.

Shambu Shoes is in the business of manufacturing basketball shoes. Accordingly the company uses the six activity cost pools listed below: Activity Cost Pool Activity Measure Maintenance Machine Hours Setups Setup Hours Cutting Supervision Setup Hours Cutting Depreciation Machine Hours Assembly supervision Direct Labor hours Assembly Depreciation Machine Hours The company has already carried out its first stage allocations of costs. The company’s annual costs and activities are summarized as follows: The company has already carried out its first stage allocations of costs. The company’s annual costs and activities are summarized as follows: Activity Cost Pool Est. Overhead Cost Expected Activity Maintenance $150,000 50,000 Machine hours Setups $450,000 300 Setup hours Cutting Supervision $270,000 300 setup hours Cutting Depreciation $160,000 80,000 Machine Hours Assembly Supervision $160,000 32,000 Direct Labor hrs Assembly Depreciation $20,000 80,000 Machine Hours Compute the activity rate for each of the activity cost pools: Show computations a. Maintenance b. Setups c. Cutting supervision d. Cutting depreciation e. Assembly supervision f. Assembly depreciation

The following transactions of My Dollar stores occurred during 2006 and 2007:

**2006**
Feb 3 – Purchased equipment for $10,000, signing a six-month, 9% note payable
Feb 28 – Recorded the week’s sales of $51,000, one-third for cash, and two-thirds on account. All sales amounts are subject to a 5% sales tax.
Mar 7 – Sent last week’s sales tax to the state
Apr 30 – Borrowed $100,000 on a four-year, 9% note payable that calls for annual payment of interest each April 30
Aug 3 – Paid the six-month, 9% note at maturity
Nov 30 – Purchased inventory at a cost of $7,200, signing a three-month, 8% note payable for that amount
Dec 31 – Accrued a warranty expense, estimated at 3% of total sales of $260,000
Dec 31 – Accrued interest on all outstanding notes payable. Accrued interest for each note separately.

**2007**
Feb 28 – Paid off the 8% inventory note, plus interest, at maturity
Apr 30 – Paid the interest for one year on the long-term note payable

TASK:
Please record the transactions in the company’s journal within the Excel sheet attached. Explanations are not required.

In 1983 the Reagan Administration introduced a new agricultural program called the Payment-in-Kind (PIK) program. Keeping this program in mind assume that the free market price of wheat is $4 per bushel and the free market supply is 20 million bushels. In the past, payment for extra wheat had been made in dollars and the wheat stored.

Suppose the government wishes to lower the wheat grown by 25% by paying farmers to withdraw land from production. However, in the new program payment is made in wheat TO THE FARMERS rather than in dollars. The wheat comes from the government reserves. The amount of wheat paid is equal to the amount that could have been harvested on the land withdrawn from production. Farmers are free to sell the wheat on the market.

1. How much wheat is now produced by the farmers?
2. How much wheat is indirectly supplied to the market by the government?
3. Will the market price change from free market price of $4? Why or why not?
4. Do farmers gain or lose from the program? How?
5. Does the government save money in PIK versus the old cash program? How?
6. Why was the program very short lived?

Use the Five Step Hypothesis Method (please show all work)

7. A recent national survey found that high school students watched an average (mean) of 6.8 DVDs per month. A random sample of 36 college students revealed that the mean number of DVDs watched last month was 6.2, with a standard deviation of 0.5. At the .05 significance level, can we conclude that college students watch fewer DVDs a month than high school students?

17. The Rocky Mountain district sales manager of Rath Publishing, Inc., a college textbook publishing company, claims that the sales representatives make an average of 40 sales calls per week on professors. Several reps say that this estimate is too low. To investigate, a random sample of 28 sales representatives reveals that the mean number of calls made last week was 42. The standard deviation of the sample is 2.1 calls. Using the .05 significance level, can we conclude that the mean number of calls per salesperson per week is more than 40?

18. The Tampa Bay (Florida) Area Chamber of Commerce wanted to know whether the mean weekly salary of nurses was larger than that of school teachers. To investigate, they collected the following information on the amounts earned last week by a sample of school teachers and nurses

School teachers ($) 845 826 827 875 784 809 802 820 829 830 842 832
Nurses ($) 841 890 821 771 850 859 825 829

Is it reasonable to conclude that the mean weekly salary of nurses is higher? Use the .01
significance level. What is the p-value?

ITeam, Inc. is a high-tech company based in Walnut Creek, California that produces, markets, and sells computer systems, peripherals, and other consumer electronic products to corporate clients and electronics retailers. iTeam has grown significantly in its first five years focusing on selling its products locally. Recently they have expanded nationally putting them in direct competition with larger, global firms. These larger companies can offer equal or lower prices with greater product diversity and more value added services.
In addition, iTeam’s cost structure has increased which has lowered their profit margins. Predicting future success is difficult since sales in this industry are difficult to predict as the high tech market has been erratic. The recent decision to source product from China has resulted in reduced product quality and political pressure domestically. In addition proposed EPA legislation if passed will be costly to producers of electronic goods. Lastly, iTeam has not established a formal sales program and relationship selling has been non-existent.
Variables in the external environment that effect sales consist of economic, legal and political, technological, social and cultural, and natural. There are many external environmental factors that are likely to affect iTeams future. The most likely to negatively affect this companies future is Global competition. Their recent national expansion from a local niche company to a national sales organization has put them in direct competition with larger companies who have the ability to price their products at the same level or lower than iTeams. In addition, these companies can offer greater product diversity and more value added services.
The recent move to source product from China has resulted in reduced product quality and caused political and social pressure for eliminating U.S. jobs. Also of serious concern is the potential level of lead in products manufactured in China. This could open the company up to legal risk from potential lawsuits and reputation risk if they were to have unfavorable media coverage.
The rapidly changing Technological environment is creating the need for extensive Research and Development to create constant innovations to keep up with the competition. The need to continually spend significantly on R & D to remain competitive in the market place is a significant factor.
If CEO Andrew Taylor chooses to move forward with an expansion into Europe and China, it will require a significant investment in an expanded supply chain and new distribution channels. It would also create the need for an improved manufacturing system to increase production capacity. Relationships would need to be developed with new customers and suppliers and iTeam’s current sales force is not experienced in this area. These challenges will clearly affect iTeam economically.

Variables in the internal environment include goals and objectives as well as internal culture, personnel, financial resources, production and supply chain capabilities, service capabilities and technological capabilities including but not limited to Research and Development. iTeam does not appear to have a well defined mission and even CEO Andrew Taylor is not convinced that the industry growth projections are accurate. Since this company was formed as an entrepreneurial start up by Mr. Taylor and several of his classmates from business school, the creative spirit has been allowed to flourish, resulting in a group of individual contributors unskilled in relationship building and most likely focused on how large they can get their commission compensation. There is currently no incentive for the sales team to spend time building new relationships with potential new suppliers or long term prospects.

Answer the questions…no right or wrong answers…
1.ETHICAL DILEMMA: When the boss says, “Change it,” and you have reservations, what should you do? You have just completed a proposal in which you promise to deliver a product to the customer by April 15. You selected this date after checking with the manufacturing department to see when they could guarantee delivery. However, when your boss reviews the proposal, she says, “We’ll never win this contract with an April 15 delivery date. Our competitors are promising to deliver by April 1. You’d better change the schedule. If we get the job, manufacturing will deliver on time. I know those guys. They’ve probably left themselves a good two-week cushion.” Your boss has been around awhile. You respect her judgment?and her authority. She’s probably right, but then again, you had to lean on the people in manufacturing to get them to agree to the April 15 date. You seriously doubt whether they can deliver the product two weeks early without sacrificing quality. Should you change the proposal? Please justify your answer.

2.Choose a specific country, such as India, Portugal, Bolivia, Thailand, or Nigeria, with which you are not familiar. Research the culture and write a brief summary of what a U.S. manager would need to know about concepts of personal space and rules of social behavior in order to conduct business successfully in that country.