PLEASE FILL IN THE EXCEL INTRODUCTION It was another sleepless night for Brian French. As a new
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INTRODUCTION It was another sleepless night for Brian French. As a new father, French had grown accustomed to sleep deprivation, but on this night, it was his business-not his newborn daughter-that had him tossing and turning. French was the president and co-owner of Peregrine, a Vancouver- based manufacturer of custom retail displays that were used in stores, banks, and art galleries (Exhibit 1). Peregrine had been working on a display for Best Buy when one of the company's two computer-numerical-control (CNC) machines broke down (Exhibit 2). When the machine went down, French watched progress on the Best Buy job slow to a halt. Although French had been assured that the CNC machine would be back up and running within 24 hours, the breakdown revealed a deeper problem: the CNC machines represented a major bottleneck for Peregrine, and if this machine was down for more than the promised 24-hour period, the Best Buy job could not be completed on time, and workers would need to be sent home. French was frustrated by this predicament and was determined to make the changes necessary to ensure it would not happen again. PEREGRINE In 2012, French left PricewaterhouseCoopers to purchase Peregrine along with two co-investors. The investment team had been looking for an opportunity to purchase a company with a successful track record and a founder who was ready for retirement; Peregrine had fit the bill. Founded. in 1977, Peregrine had been operated profitably for 35 years in downtown Vancouver, British Columbia, Canada. In Peregrine, the investors would be acquiring a company with a history of success and an experienced team that had expertise in manufacturing a wide array of custom plastic products. When Peregrine was acquired in 2012, it had employed 6 people and had $600,000 in sales. Under French's management, the company had grown to more than 30 employees and more than $6 million in sales by 2016. THE CNC MACHINE DECISION When the CNC machine broke down, it was a wake-up call for French. The production line was dependent on both CNC machines working full time-if they slowed down or needed repair, the business suffered. French believed the key to relieving this bottleneck would be increasing capacity. It not only would prevent downtime but also would allow the company to take on new business. If capacity increased, French estimated that sales revenues would rise by at least $50,000 per month due to unmet demand and increased efficiency. The company's margins on the additional revenues were expected to be 35%. French saw three viable options to increase capacity: 1. Purchase an additional CNC machine for cash, 2. Finance the purchase of an additional CNC machine, or 3. Add a third shift (a night shift) to better utilize the two CNC machines Peregrine already owned. INTRODUCTION It was another sleepless night for Brian French. As a new father, French had grown accustomed to sleep deprivation, but on this night, it was his business-not his newborn daughter-that had him tossing and turning. French was the president and co-owner of Peregrine, a Vancouver- based manufacturer of custom retail displays that were used in stores, banks, and art galleries (Exhibit 1). Peregrine had been working on a display for Best Buy when one of the company's two computer-numerical-control (CNC) machines broke down (Exhibit 2). When the machine went down, French watched progress on the Best Buy job slow to a halt. Although French had been assured that the CNC machine would be back up and running within 24 hours, the breakdown revealed a deeper problem: the CNC machines represented a major bottleneck for Peregrine, and if this machine was down for more than the promised 24-hour period, the Best Buy job could not be completed on time, and workers would need to be sent home. French was frustrated by this predicament and was determined to make the changes necessary to ensure it would not happen again. PEREGRINE In 2012, French left PricewaterhouseCoopers to purchase Peregrine along with two co-investors. The investment team had been looking for an opportunity to purchase a company with a successful track record and a founder who was ready for retirement; Peregrine had fit the bill. Founded. in 1977, Peregrine had been operated profitably for 35 years in downtown Vancouver, British Columbia, Canada. In Peregrine, the investors would be acquiring a company with a history of success and an experienced team that had expertise in manufacturing a wide array of custom plastic products. When Peregrine was acquired in 2012, it had employed 6 people and had $600,000 in sales. Under French's management, the company had grown to more than 30 employees and more than $6 million in sales by 2016. THE CNC MACHINE DECISION When the CNC machine broke down, it was a wake-up call for French. The production line was dependent on both CNC machines working full time-if they slowed down or needed repair, the business suffered. French believed the key to relieving this bottleneck would be increasing capacity. It not only would prevent downtime but also would allow the company to take on new business. If capacity increased, French estimated that sales revenues would rise by at least $50,000 per month due to unmet demand and increased efficiency. The company's margins on the additional revenues were expected to be 35%. French saw three viable options to increase capacity: 1. Purchase an additional CNC machine for cash, 2. Finance the purchase of an additional CNC machine, or 3. Add a third shift (a night shift) to better utilize the two CNC machines Peregrine already owned.
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Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date:
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