QuickSnap Photo Company manufactures high end cameras with operations in multiple cities across North America. One...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
QuickSnap Photo Company manufactures high end cameras with operations in multiple cities across North America. One of the largest manufacturing facilities in Vancouver, British Columbia specializes in the production of waterproof cameras. The manager of the Vancouver operations recently found out that QuickSnap received an offer from another company to provide the entire volume of cameras that the Vancouver plant typically produces for a total of $29 million per year. The manager was surprised at how low this offer was, considering the budget for the Vancouver plant to produce these cameras was $34.8 million for the coming year. If QuickSnap accepts this offer to buy the waterproof cameras from an external company, they will no longer require the Vancouver production facility and it will be shut down. The annual budget for the Vancouver facility's operating costs for the coming year: Materials Labour: Direct Supervision Indirect Plant Annual Operating costs Budget Overhead: Depreciation equipment Depreciation building Pension expense Plant manager and staff Corporate expenses** Total budgeted costs 8,050,000 750,000 1,000,000 2,000,000 2,500,000 2,400,000 800,000 3,000,000 $ 12,300,000 11,800,000 10.700.000 $ 34,800,000 *Expense for the manager and his regional staff. **Fixed corporate expenses allocated to plants and other operating units based on total budgeted wage and salary costs. Additional facts regarding the facility's operations are as follows: a. Due to the plant's commitment to use high-quality fabrics in all its products, the Purchasing Department was instructed to place blanket purchase orders with major suppliers to ensure the receipt of sufficient materials for the coming year. If these orders are cancelled because of the plant closing, termination charges would amount to 30% of the cost of direct materials. b. Approximately 300 employees will lose their jobs if the plant is closed. This includes all the direct labourers and supervisors, management and staff, and the plumbers, electricians, and other skilled workers classified as indirect plant workers. Some of these workers would have difficulty finding new jobs. Nearly all the production workers would have difficulty matching the plant's base pay of $13.00 per hour, which is the highest in the area. A clause in the plant's contract with the union may help some employees; the company must provide employment assistance and job training to its former employees for 12 months after a plant closing. The estimated cost to administer this service would be $1.1 million. c. Some employees would probably choose early retirement because the company has an excellent pension plan. In fact, $1.1 million of the annual pension expenditures would continue whether the plant is open or not. d. The manager and his regional staff would not be affected by the closing of the Vancouver plant. They would still be responsible for running three other plants. e. If the plant were closed, the company would realize about $3 million salvage value for the equipment in the plant. If the plant remains open, there are no plans to make any significant investments in new equipment or buildings. The old equipment is adequate for the job and should last indefinitely. Required: 1. Without regard to the costs, identify the advantages of the company continuing to produce cameras from its own Vancouver plant. 2. Without regard to costs, identify the disadvantages of the company continuing to produce cameras from its own Vancouver plant. QuickSnap Photo Company manufactures high end cameras with operations in multiple cities across North America. One of the largest manufacturing facilities in Vancouver, British Columbia specializes in the production of waterproof cameras. The manager of the Vancouver operations recently found out that QuickSnap received an offer from another company to provide the entire volume of cameras that the Vancouver plant typically produces for a total of $29 million per year. The manager was surprised at how low this offer was, considering the budget for the Vancouver plant to produce these cameras was $34.8 million for the coming year. If QuickSnap accepts this offer to buy the waterproof cameras from an external company, they will no longer require the Vancouver production facility and it will be shut down. The annual budget for the Vancouver facility's operating costs for the coming year: Materials Labour: Direct Supervision Indirect Plant Annual Operating costs Budget Overhead: Depreciation equipment Depreciation building Pension expense Plant manager and staff Corporate expenses** Total budgeted costs 8,050,000 750,000 1,000,000 2,000,000 2,500,000 2,400,000 800,000 3,000,000 $ 12,300,000 11,800,000 10.700.000 $ 34,800,000 *Expense for the manager and his regional staff. **Fixed corporate expenses allocated to plants and other operating units based on total budgeted wage and salary costs. Additional facts regarding the facility's operations are as follows: a. Due to the plant's commitment to use high-quality fabrics in all its products, the Purchasing Department was instructed to place blanket purchase orders with major suppliers to ensure the receipt of sufficient materials for the coming year. If these orders are cancelled because of the plant closing, termination charges would amount to 30% of the cost of direct materials. b. Approximately 300 employees will lose their jobs if the plant is closed. This includes all the direct labourers and supervisors, management and staff, and the plumbers, electricians, and other skilled workers classified as indirect plant workers. Some of these workers would have difficulty finding new jobs. Nearly all the production workers would have difficulty matching the plant's base pay of $13.00 per hour, which is the highest in the area. A clause in the plant's contract with the union may help some employees; the company must provide employment assistance and job training to its former employees for 12 months after a plant closing. The estimated cost to administer this service would be $1.1 million. c. Some employees would probably choose early retirement because the company has an excellent pension plan. In fact, $1.1 million of the annual pension expenditures would continue whether the plant is open or not. d. The manager and his regional staff would not be affected by the closing of the Vancouver plant. They would still be responsible for running three other plants. e. If the plant were closed, the company would realize about $3 million salvage value for the equipment in the plant. If the plant remains open, there are no plans to make any significant investments in new equipment or buildings. The old equipment is adequate for the job and should last indefinitely. Required: 1. Without regard to the costs, identify the advantages of the company continuing to produce cameras from its own Vancouver plant. 2. Without regard to costs, identify the disadvantages of the company continuing to produce cameras from its own Vancouver plant.
Expert Answer:
Answer rating: 100% (QA)
1 The advantages of the company continuing to produce cameras from its own Vancouver plant include t... View the full answer
Related Book For
Essentials of Statistics for Business and Economics
ISBN: 978-1305081598
7th edition
Authors: David Anderson, Thomas Williams, Dennis Sweeney, Jeffrey Cam
Posted Date:
Students also viewed these accounting questions
-
QuickSnap Photo Company manufactures high end cameras with operations in multiple cities across North America. One of the largest manufacturing facilities in Vancouver, British Columbia specializes...
-
The Kroger Company is one of the largest grocery retailers in the United States, with over 2000 grocery stores across the country. Kroger uses an online customer opinion questionnaire to obtain...
-
The Electronic Controls Company (ECCO) is one of the largest makers of backup alarms in the world. Backup alarms are the safety devices that emit a high-pitched beeping sound when a truck, forklift,...
-
For Problem 511, complete the design of a pair of helical gears to operate under the stated conditions. Specify the geometry of the gears and the material and its heat treatment. Assume that the...
-
Suppose that you have a fair coin and you label the head side as 1 and the tail side as 0. a. Now, you are asked to flip the coin 2 times and write down the numerical value that results from each...
-
Derive an expression for the isothermal compressibility of a substance whose equation of state is where a and b are empirical constants. RT CT
-
Use R to create a randomization scheme to randomize 222 subjects to three treatments such that there are an equal number of subjects assigned to each treatment. You may use the functions developed in...
-
Amigos Burrito Inc. sells franchises to independent operators throughout the northwestern part of the United States. The contract with the franchisee includes the following provisions. 1. The...
-
How could EMS services play a role in advancing the CCMC (Committee on the cost of medical care) guideline advocating for the extension of all basic public health services to the entire population?
-
Journal Entry 14 15 17 19 SESSION DATE - APRIL 14, 2023 Memo #4 Dated April 8/23 From Owner: Cheque #5033 for $2 435.60 from Grande Pointe Towers was postdated and the discount period had expired. It...
-
Ahmed contributed cash of $20,000 into the partnership. The journal entry to record this transaction is: Cash $20,000 Dr. partnership $20,000 Cr True False 00
-
In-house training programs are learning opportunities developed by the organization in which they are used. An in-house trainingprogram is usually the second step in the training process and is often...
-
Students will be given 30 minutes for the following activity. Each student will use the Bingo sheet provided. Students will need to complete each square individually by writing their response to the...
-
With the help of HR and finance you were able to put together a nice project organization structure . As a Project Manager you have a decent understanding of The Tuckman Model of Team Development ....
-
Alexia's sister is also in the industry; in fact, she is the local sales manager for a training company that will be a top contender for the job. Since Alexia has a family member and friends who work...
-
Evaluate the different approaches used in consulting (expert approach, collaborative consulting approach, process approach, medical approach, etc.) and discuss the advantages/disadvantages of each...
-
"IMPLEMENTATION SECTION" of Marketing plan. Below are the questions? A specific and detailed sequence and timeline of key marketing plan steps ? For example. When does your company develop its...
-
Independent random samples of sizes n1 = 30 and n2 = 50 are taken from two normal populations having the means 1 = 78 and 2 = 75 and the variances 21 = 150 and 22 = 200. Use the results of Exercise...
-
Fortune magazine publishes an annual survey of the best companies to work for. The data in the file named FortuneBest shows the rank, company name, the size of the company, and the percentage job...
-
A Bureau of National Affairs survey found that 79% of employers provide their workers with a two-day paid Thanksgiving holiday with workers off both Thursday and Friday (USA today, November 12,...
-
The Health Care Cost Institute tracks health care expenditures for beneficiaries under the age of 65 who are covered by employer-sponsored private health insurance (Health Care Cost Institute...
-
Find the probability of an IQ less than 85.
-
If 25 women are randomly selected, find the probability that the mean of their red blood cell counts is less than 4.444. Assume that red blood cell counts of women are normally distributed with a...
-
Mensa International calls itself the international high IQ society, and it has more than 100,000 members. Mensa states that candidates for membership of Mensa must achieve a score at or above the...
Study smarter with the SolutionInn App