28) LO.4 (EVA) Mountain Mist Inc.’s cost of capital is 11 percent. In 2008, one of the firm’s division generated and EVA of $1,130,000. The fair market value of the capital investment in that division was $26,500. How much after-tax income was generated by the division in 2008?

39) LO.4 (ROI) Spruce Enterprises operates a chain of lumber stores. In 2008, corporate management examined industry-level data and determined the following performance targets for lumber retail stores:
Asset turnover 1.7
Profit margin 8.0%
The actual 2008 results for the company’s lumber retail stores follow:
Total assets at beginning of year $10,200,000
Total assets at end of year 12,300,000
Sales 28,250,000
Operating expenses 25,885,000
a. For 2008, how did the lumber retail stores perform relative to their industry norms?

b. Where, as indicated by the performance measures, are the most likely areas to improve performance in the retail lumber stores?

c. What are the advantages and disadvantages of setting a performance target at the start of the year compared with one that is determined at the end of the year based on actual industry performance?

48) LO.6-LO.8 (Performance measurement; BSC) For each of the following items, indicate two performance measurement that could be obtained from a cost management system. Classify each item into one of the four balanced scorecard perspectives.
a. Quality
b. Cost
c. Production line flexibility
d. People productivity and development
e. Inventory management
f. Lead time
g. Responsive after-sale service
h. Customer satisfaction and retention
i. Product and process design
j. Manufacturing planning process
k. Procurement process
l. Manufacturing process
m. Management accomplishments
n. Marketing/sales and customer service
o. Delivery performance
p. Financial accounting services

Exercises Chapter 18
21) LO.4 (Target costing) Taurus Tools has develop 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 product the new utensil?

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 supplies. The company’s three supplies 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 supplies; and length of system implementation.

PLEASE HELP.
THANK YOU

Prof Pikering said work on it yourself!

28) To find the after-tax income generated by the division in 2008, you need to calculate the division's net operating profit after taxes (NOPAT). The formula to calculate NOPAT is:

NOPAT = EVA / (1 - Tax Rate)

Given that the EVA is $1,130,000 and the cost of capital is 11%, we can calculate the division's NOPAT as follows:

NOPAT = $1,130,000 / (1 - 0.11)

To find the tax rate, we need to know the applicable tax rate. If the tax rate is not given, we cannot provide an exact answer.

39) a. To determine how the lumber retail stores performed relative to their industry norms, we need to calculate the return on investment (ROI) and compare it to the industry average. The formula for ROI is:

ROI = Profit Margin * Asset Turnover

Profit Margin = Net Income / Sales
Asset Turnover = Sales / Average Total Assets

Profit Margin = ($28,250,000 - $25,885,000) / $28,250,000
Asset Turnover = $28,250,000 / ($10,200,000 + $12,300,000) / 2

Then, we calculate ROI as:

ROI = Profit Margin * Asset Turnover

b. To identify the areas to improve performance in the retail lumber stores, we need to analyze the components of ROI. This includes improving profit margin and asset turnover.

c. Setting a performance target at the start of the year has the advantage of providing a clear direction and focus for the organization. However, it may not accurately reflect the actual market conditions or industry performance, which can change throughout the year. Setting a performance target based on actual industry performance at the end of the year allows for greater alignment with market conditions but may not provide enough time for the organization to adapt and make necessary improvements.

48) Here are two possible performance measurements for each item and their corresponding balanced scorecard perspective:

a. Quality
- Defect rate: Number of defects found in the product divided by the total units produced (Internal Process Perspective)
- Customer satisfaction score: Survey results measuring customer satisfaction with the product's quality (Customer Perspective)

b. Cost
- Cost per unit: Total manufacturing costs divided by the number of units produced (Financial Perspective)
- Cost variance: Difference between budgeted costs and actual costs (Financial Perspective)

c. Production line flexibility
- Changeover time: Time taken to switch production between different products (Internal Process Perspective)
- Product variety index: Number of unique product variations produced on the production line (Internal Process Perspective)

d. People productivity and development
- Labor productivity: Units produced per labor hour (Learning and Growth Perspective)
- Employee turnover rate: Percentage of employees who leave the company in a given period (Learning and Growth Perspective)

e. Inventory management
- Inventory turnover ratio: Cost of goods sold divided by average inventory value (Financial Perspective)
- Stockout rate: Percentage of times the company runs out of stock for a particular product (Internal Process Perspective)

f. Lead time
- Order processing time: Time taken from receiving an order to shipping the product (Internal Process Perspective)
- Delivery time: Time taken from order placement to customer receipt of the product (Customer Perspective)

g. Responsive after-sale service
- Average response time: Time taken by customer service to respond to customer inquiries or complaints (Customer Perspective)
- Customer satisfaction with after-sale service: Survey results measuring customer satisfaction with the company's after-sale service (Customer Perspective)

h. Customer satisfaction and retention
- Net Promoter Score (NPS): Survey results measuring customer loyalty and likelihood to recommend the company (Customer Perspective)
- Customer retention rate: Percentage of customers who continue to purchase from the company (Customer Perspective)

i. Product and process design
- Number of new product ideas generated: Number of new product concepts proposed by employees (Learning and Growth Perspective)
- Time to market: Time taken from concept to launch for new products (Internal Process Perspective)

j. Manufacturing planning process
- Production capacity utilization rate: Actual production output divided by maximum capacity (Internal Process Perspective)
- Manufacturing cycle time: Time taken to complete one iteration of the manufacturing process (Internal Process Perspective)

k. Procurement process
- Supplier evaluation score: Rating system measuring supplier performance and quality (Internal Process Perspective)
- Purchase cost variance: Difference between actual purchase costs and budgeted costs (Financial Perspective)

l. Manufacturing process
- Overall equipment effectiveness (OEE): Measures the efficiency of the manufacturing process based on availability, performance, and quality (Internal Process Perspective)
- Scrap rate: Percentage of defective or unusable products produced during manufacturing (Internal Process Perspective)

m. Management accomplishments
- Employee satisfaction survey results: Survey measuring employee satisfaction with company leadership and management (Learning and Growth Perspective)
- Employee turnover rate for managers: Percentage of managers who leave the company in a given period (Learning and Growth Perspective)

n. Marketing/sales and customer service
- Conversion rate: Percentage of leads that result in a sale (Customer Perspective)
- Customer acquisition cost: Cost of acquiring new customers (Financial Perspective)

o. Delivery performance
- On-time delivery rate: Percentage of orders delivered on time (Customer Perspective)
- Order fill rate: Percentage of customer orders fulfilled completely (Internal Process Perspective)

p. Financial accounting services
- Accuracy of financial statements: Number of errors in financial statements (Financial Perspective)
- Timeliness of financial reporting: Time taken to prepare and present financial statements (Financial Perspective)

21) To find the target cost to produce the new utensil, we need to subtract the desired profit per unit from the expected price for each year and multiply it by the expected volume:

Target Cost = Expected Price - Desired Profit

Year 1: $19 - $4.50
Year 2: $18 - $4.50
Year 3: $16 - $4.50
Year 4: $12 - $4.50

29) In this situation, the problems with the just-in-time inventory system may be due to the following:

Internal and external communication: There could be a lack of effective communication between the company and its suppliers, leading to ordering the wrong materials or delays in delivery.

Possible engineering changes and their impacts: If the company has made engineering changes to its products or processes but has not communicated them properly to suppliers, they may be sending the wrong materials.

Number, quality, and location of supplies: If the company relies on a limited number of suppliers or has not properly vetted them for quality or reliability, it can result in incorrect materials being sent.

Length of system implementation: If the company has recently implemented the just-in-time system, it may still be in the early stages of fine-tuning and optimizing the process. It takes time for all parties involved to adjust to the new system and resolve any initial issues.

Overall, the problems may stem from inefficiencies in the supply chain management process. It is important for the company to address these issues by improving communication, ensuring supplier quality and reliability, and continuously evaluating and refining the implementation of the just-in-time inventory system.