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CASE STUDY: YOUNGSTOWN BANK

CASE STUDY: YOUNGSTOWN BANK
(Adapted from Greenbaum, Thakor, & Boot. 2016. Contemporary Financial
Intermediation 3
rd Ed.)
Introduction
John Standard has been the CEO of Youngstown Bank since the summer of 1998.
Before taking this position, he had been a vice president of operations for Interbank, a large
regional bank. One of the primary reasons that he was hired by Youngstown Bank was his
experience with a large operating department. At the time, Youngstown Bank had been
going through some difficulties related to inefficient operating procedures, and Mr.
Standard had acquired a reputation at Interbank for strong motivational and organizational
skills. His management of Youngstown has been almost flawless, and the institutional
culture of the bank takes great pride in the fact that the bank is a very “tight ship.”
Youngstown Bank has been in business in Youngstown, Arizona, since 1910. When
John Standard was brought in as CEO in 1998, the stock price was at 4½, down from a high
of 10. The previous CEO was the son of the founder, and he had resisted the replacement of
legacy systems with more modern information processing infrastructure, allowing the
operating departments to languish in mediocrity. Prior to Mr. Standard’s arrival, people
barely even knew what the bank’s policies were on loans! The only kinds of products
Youngstown Bank offered were simple fixed-rate loans. John Standard changed all that. He
put together a set of standard procedures for loans and loan commitments, and attempted to
tailor the bank’s policies to the risk and liquidity needs of its customers. And the stock
price responded; by the end of 1999, Youngstown Bank’s stock price had doubled to $9,
and continued to rise through 2000.
But starting in 2001, the bank’s stock price has been languishing. Even though the
bank’s basic structure has not changed and profitability is good, the stock price has simply
not moved upward over time, although the stock prices of some competing banks have
moved up significantly. The major shareholders in the bank aren’t too upset yet, but there
have been a few grumblings. Standard realizes that there could be major trouble down the
line unless he can find a way to get the share price up. He decides to call in his chief
financial officer (CFO), Bryan Shelton, to discuss the stock price situation.
The Initial Meeting
Standard : Come on in, Bryan, and have a seat. Let’s get right down to business here.
I’m worried about our stock price performance lately. You’ve been with Youngstown
Bank for three years now – what was the stock price when you got here?
Shelton : It was right around 37, I think.
Standard : Well, it is just over 40 now. We closed at 40 ¼ yesterday. That’s only 3
dollars in 3 years! What is going on? I don’t understand it. Why is our stock price so
low? Take a look at how our market-to-book ratio compares with that of our
competitors. It is in the dirt! (See Exhibit A). Why?

Shelton : That’s a good question. Considering how precisely we control everything,
and considering that our profits and cash flows are still looking good, I don’t know of
any reason why the stock should be down. I’m tempted to just say that the market is
failing to recognize our value. Maybe they’ll come around when we post good
numbers again next quarter.
Standard : Well, you might be right, but I’m uncomfortable. Maybe the market is
reacting to something that we don’t know about. I think we should look into this
some more, and try to get to the bottom of it. [ The meeting ends on that note, and
Mr. Shelton says that he will look into the matter carefully and report back. He agrees
that they should meet a week later to discuss the issue again. ]
The Second Meeting
Shelton : Well, I’ve looked into this some more, and frankly I’m still puzzled. Take a
look at these numbers. Our current balance sheet looks good, and compares very
favorably with the way it looked during 2000, the heyday of our stock price rise (see
Exhibit B). Our key rations look just fine, too, compared to 2000 (see Exhibit C).
Moreover, we also seem to be doing well relative to industry averages (see Exhibit
D).
Standard : This all looks great, just like I thought it would. Look at this one. ( He
points at Exhibit D. ) Our return on assets is great. So what do you think?
Shelton : Well, one of the people I had helping me to put these numbers together for
you suggested that we might want to think about our loan commitments, which don’t
appear on our balance sheet. Maybe those are dragging our stock price down.
Standard : That doesn’t make sense. Our policies on loan commitments haven’t
changed, have they? What kind of data do you have on those?
Shelton : Well, take a look at these. ( He pulls out Exhibits E and F. ) These show the
history of interest rates and the fees that we charge for loan commitments. I checked
on the kinds of borrowers who’ve been buying these commitments, and the quality of
the borrowers seems to be in line with our history. To tell you the truth, I’m still
struggling with what all this stuff means. I don’t see that anything has changed
anywhere. But our stock price. . .
Standard : Well, all I can tell you is keep working on it. See if you can find anything
here that will help explain why our stock price is low. Is there something that we’ve
overlooked? Is the bank in some danger that we’ve failed to realize? [ Again, the
meeting ends and they agree to meet in a week. This time, Standard has some specific
questions to which he wants answers. Shelton plans to go over everything carefully,
looking for some explanation for the poor performance of the stock price, an
explanation that takes into account all the facts about the bank’s situation. ]

The Assignment
Mr. Standard gives Mr. Shelton these specific questions:
1. Explain the difference between the bank officer’s and the market perception of the
the value of the bank’s shares. Identify key factors for each position.
2. Does the stock price indicate any dangers the bank may face? If so what strategies
could offset those dangers, and which should the bank adopt?

 
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Posted by on July 6, 2017 in academic writing

 

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Week 7 Learning Activities

Week 7 Learning Activities

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Learning Activity 1:  Theme One: Technology and decision making how it makes change.

Less-expensive information and communication technologies have changed where decisions are made on the corporate ladder.Access to databases and advanced software allows lower-level employees to act with more autonomy, but the spread of e-mail and mobile phones means supervisors can be consulted with greater ease than ever before.

Using the reading explain the impact that technology has on decision making and what this means for an organization with respect to “creating a chain of command”.

Learning Activity 2:  Theme Two

Using the reading for this week read the fact pattern below and discuss the following ideas.

  • How does this fact pattern show the various levels of decision making in an organization?
  •  Identify the organizational ethical decision that created the current crisis for Sycamore Pharmaceuticals.
  • Examine and identify the current decisions that face Dominquez, Blake, and the organization. Using the appropriate decision making process for each level walk through each person and how they may decide their fate.
  • Based on the reading suggest ways that the leaders might change the culture and values of the corporation to make ethical decisions.
  • How could the leaders personally change their collective response to decision making in the future?

Sycamore Pharmaceuticals

“Did you see the report on CNN last night, claiming Sycamore manipulated scientific studies on Osteoporin?” asked Cole Dominguez, as he rushed into John Blake’s office, quickly shutting the door behind him. “I can’t believe this has leaked out. If the FDA pulls this drug from the market, we can kiss next quarter’s big bonus goodbye,” he exclaimed. Blake had seen the report and had expected Sycamore, a global pharmaceutical company, to come under fire for promoting its popular rheumatoid arthritis drug, Osteoporin, for the treatment of other diseases like Crohn’s disease and lupus—despite negative scientific studies that challenged its effectiveness. However, the aggressive marketing campaign was well underway when the unfavorable studies came in.

Sycamore’s top management chose to suppress the unflattering findings and move ahead with a systematic marketing strategy that created an illusion of Osteoporin’s effectiveness and offered financial incentives to doctors for prescribing the drug even in cases where there was no evidence it would work.

John Blake sat back in his chair and nervously ran his fingers through his hair. He exhaled deeply and looked at Dominguez, saying, “We knew we were taking a risk, Cole, aggressively marketing a drug without scientific studies to back up our claims that it worked.  The CNN report is only the beginning, my friend. You and I should expect to be called to reveal everything we know.  Ethically, Sycamore is responsible for publishing reports on its drugs, even the ones that aren’t so flattering.”

Dominguez knew his position on the situation.  He would stand by Sycamore management team and back them up, no matter what.  He needed this job and knew he had been following orders. Dominguez recalled an e-mail from the CEO in 2008 that said, “. We should avoid publishing anything that damages Osteoporin’s marketing success.  Do not report anything that is negative. Delay these reports as long as legally possible.” Dominguez wondered aloud, “Weren’t we just following orders?” Following the report on CNN, Sycamore’s communications department went on high alert and moved into crisis mode.  Press releases and the corporate blog were issuing the same message to build credibility and put out the rapidly growing fire. In part, the statement said, “Sycamore is committed to the safe distribution of Osteoporin and the communication of medically or scientifically significant results of all studies, regardless of outcome.”   Blake shuddered as he read the blog and glanced up at his frantic colleague. “You knew this was going to happen, didn’t you Cole? How long can deception like this stay under wraps? Don’t we have a responsibility to the poor man or woman popping that pill every day? They think it’s helping them. It probably isn’t. This just feels so wrong,” he said as he buried his head in his hands. Their conversation was interrupted by a knock at the door. Blake waved in the general manager, who asked if they would both meet individually with an FDA representative that afternoon to answer questions about their knowledge of the timing and content of the scientific studies on Osteoporin for the treatment of Crohn’s disease and lupus. Blake’s gut feeling was that he needed to be honest with the FDA, but he knew he would likely be fired or demoted if he didn’t support management.  He also knew that pulling Osteoporin from the market would result in severe losses for Sycamore and the loss of a significant bonus for himself.

Source: Based on Gardiner Harris, “Document Details Plan to Promote Costly Drug

The New York Times (September 2, 2009), http://www.nytimes.com/2009/09/02/business/02drug.html?_r=1&emc=eta1

(accessed September 30, 2009); and Keith J. Winstein, “Suit Alleges Pfizer Spun

Unfavorable Drug Studies,” The Wall Street Journal (October 8, 2008), p. B1.

 

Rubrics
  • Participation Rubric (30%)
 
 

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Quiz 1

Question 1 0.5 / 0.5 points

Pertaining to international trade, the acronym GATT stands for:

A)

Global Agency of Textile Trade

B)

Georgia Affiliation of Timed Transit
Correct Response

C)

General Agreement on Tariffs and Trade
Question 2 0.5 / 0.5 points

Which function is responsible for raising the funds required for the business to grow?
Correct Response

A)

Finance

B)

Marketing

C)

Accounting
Question 3 0.5 / 0.5 points

When determining which country has a comparative advantage in producing a good or service, one must consider:

A)

balance of trade
Correct Response

B)

opportunity cost

C)

balance of payments
Question 4 0.5 / 0.5 points

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ________, shown on the horizontal axis.

A)

Quantity demanded
Correct Response

B)

Quantity supplied

C)

Supply
Question 5 0.5 / 0.5 points

Two countries, Footland and Pedtopia, are participating in trade. Both countries are capable of making both athletic shoes and digital music playing devices, but they are not equally effective at both. The table below shows what each country is capable of producing if all labor is focused on a single product. Which statement(s) below are correct?

Product

Footland

Pedtopia

Pair of Shoes

100

150

Digital Music Devices

5

30

A)

Footland has a comparative advantage in shoes and Pedtopia has an absolute advantage in digital music devices
Correct Response

B)

Pedtopia has a comparative advantage in both products

C)

Footland has a comparative advantage in both products
Question 6 0.5 / 0.5 points

Pertaining to international trade, the acronym WTO stands for:
Correct Response

A)

World Trade Organization

B)

Working Trade Organization

C)

World Transaction Operations
Question 7 0.5 / 0.5 points

A change in quantity supplied results from a change in ________, and leads to ________.

A)

A supply shifter: a shift of the supply curve to the right or left
Correct Response

B)

Price: a movement along the supply curve

C)

Quantity demanded: a shift of the supply curve to the right or left
Question 8 0.5 / 0.5 points

Complete the following sentence. If people expect that the price of electronics will increase soon, that belief may result in a(n):

A)

Decrease in the price of electronics today

B)

Decrease in the demand for electronics today
Correct Response

C)

Increase in the demand for electronics today
Question 9 0.5 / 0.5 points

Statistics that indicate change in the status of the economy a few months in the past are called ________ economic indicators.
Correct Response

A)

Lagging

B)

Prognosticating

C)

Leading
Question 10 0 / 0.5 points

Tiny Taste Buds was a gourmet baby food company founded in 2006 and was growing until the fall of 2008 when potential investors in the company pulled out because they were concerned about the weakening economy and chose to make fewer outside investments. Based on the information provided about the company, what type of organization was Tiny Taste Buds?
Incorrect Response

A)

Benefit corporation
Correct Answer

B)

For-profit

C)

Non-profit
Question 11 0.5 / 0.5 points

A person who seeks to earn profits by finding new ways to organize factors of production is a(n):

A)

Manager
Correct Response

B)

Entrepreneur

C)

Employee
Question 12 0.5 / 0.5 points

An economy has remained the same for many years and it is not unusual to see families stay in the same occupation for generations. This is most likely a ________ economy.

A)

Command
Correct Response

B)

Traditional

C)

Socialist
Question 13 0 / 0.5 points

Which of the following has primary responsibility for financing economic development on behalf of the international community?
Correct Answer

A)

the World Bank

B)

the WTO
Incorrect Response

C)

the International Monetary Fund
Question 14 0.5 / 0.5 points

In 2015, the fictional country Moonbeam Island had $1.8 billion in imports and $1.2 billion in exports. Its balance of trade is:

A)

$600 million surplus

B)

$3 billion surplus
Correct Response

C)

$600 million deficit
Question 15 0.5 / 0.5 points

Shopping online you find a new pair of running shoes that is a brand you have purchased before. They are offered for 1,500 Thai baht. You check the exchange rate and find that the current exchange rate for the baht is $.03 bahts per dollar. What is the price for the shoes in U.S. dollars?
Correct Response

A)

$45.00

B)

$450.00

C)

$4.50
Question 16 0.5 / 0.5 points

If a country is seeking credit to stabilize its banking system to prevent a collapse that would have a global impact then it would turn to:

A)

the Federal Reserve
Correct Response

B)

the International Monetary Fund

C)

the World Bank
Question 17 0.5 / 0.5 points

Which of the following events will increase supply in the market for natural gas?

A)

Demand for natural gas increases
Correct Response

B)

A new technique for inexpensively accessing new reserves is discovered

C)

The price of natural gas rises
Question 18 0.5 / 0.5 points

An organization’s culture is strongly influenced by ________.

A)

Entry level employees

B)

Retired employees
Correct Response

C)

Top managers
Question 19 0.5 / 0.5 points

When the Japanese yen goes up relative to the U.S. dollar:
Correct Response

A)

Japanese goods will be more expensive for U.S. citizens

B)

U.S. citizens will receive more Japanese yen for each dollar they exchange

C)

Japanese goods will be cheaper for U.S. citizens
Question 20 0.5 / 0.5 points

According to the law of demand, assuming all other variables are held constant, ________.
Correct Response

A)

As the price of bread increase, the quantity of bread demanded will decrease

B)

As the price of bread increases, the quantity of bread demanded will increase

C)

As the demand for bread increases, the price of bread will also increase
Question 21 0.5 / 0.5 points

Which of the following is/are external stakeholders in a business?
Correct Response

A)

Creditors

B)

Employees

C)

Owners
Question 22 0.5 / 0.5 points

When an economic system is characterized by an emphasis on entrepreneurship and free enterprise, we would classify it as a ________ as opposed to a ________, where the government makes the majority of the decisions regarding economic goals.

A)

High-income: low-income

B)

Regulated: lack of regulation
Correct Response

C)

Market oriented: command economy
Question 23 0.5 / 0.5 points

All economies in the world share three primary goals, which are:

A)

Growth, happiness and price stability

B)

Productivity, high employment and price stability
Correct Response

C)

Growth, high employment, and price stability
Question 24 0.5 / 0.5 points

________ is the system of shared beliefs, values, customs, and behaviors that govern the interactions of members of a society.

A)

Organization
Correct Response

B)

Culture

C)

Humanity

 
 

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Health Economics

In traditional fee-for-service Medicare, physicians are paid on a per-service basis. Payments are based on the “relative value units” of a particular service, reflecting the relative costliness of inputs.

How does the mix of services provided by primary care physicians affect their reimbursement relative to specialists? (2 points)
B –Describe the principal-agent problem in fee-for-service payment of physicians and physician-induced demand (also called supplier-induced demand).

-Describe the findings of Baker (2010).

-What does this imply about physician-induced demand? (3 points)

– Compare the structure of payment under the Alternative Quality Contract compared to fee-for-service reimbursement.
-How does this change the incentives for the volume of services provided by physicians?

-Are the findings of Song, et al. (2014) consistent with your theoretical prediction? (3 points)

D. What is a potential unintended consequence of “global budgets” such as that in the Alternative Quality Contract? How does the AQC attempt to mitigate this incentive, and was the attempt successful? (3 points)
E. In April 2015, Congress passed the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA). Under MACRA, starting in 2019 physicians will either be paid either based on: (a) fee-for-service reimbursement, with bonuses or penalties based on quality and resource use, or (b) they will receive regular 5% payment rate increases between 2019-2014 if they participate in alternative payment models.
It is yet to be finally determined, however, what will count as an alternative payment model. Below are two simplified scenarios from Hussey, Liu, and White (2017):

Scenario 1: Alternative payment models include both patient-centered medical homes (low financial risk, essentially fee-for-service, but physicians receive a “case management” fee) and accountable care organizations (physicians are at financial risk for spending above a target).

Scenario 2: Alternative payment models just include accountable care organizations (Hussey et al. 2017).

How might physician and hospital spending differ between Scenarios 1 and 2? Please explain your answer based on the lecture and course readings. (4 points)

Some policymakers have advocated for malpractice reform as a means for reducing health care spending.
Drawing from the readings and the lecture, describe conceptually why malpractice and health care utilization may be related. (2 points)
Do you think malpractice reform would reduce unnecessary health care use? Cite empirical evidence for and against. (3 points)

Part 2
Part 2. Medicare payment of hospitals and post-acute providers and bundled payment
June 17, 2017 admin
ORDER THE PAPER NOW

CMS’ Bundled Payments for Care Improvement Initiative (BPCI) defines episodes of care (initiated by hospital stays) and spending targets for traditional Medicare enrollees. Providers continue to be paid on a fee-for-service basis. If total spending exceeds the target, then the “contracting entity” pays Medicare the difference. If total spending is below the target, then Medicare pays the contracting entity the difference.

Consider BPCI Models 2 and 3 (listed in Table 3.1 of MedPAC (2013), pasted below), where a hospital stay initiates each model. For this exercise, consider a hospital as the contracting entity directing care under Model 2 and a skilled nursing facility (SNF) as the contracted entity directing care under Model 3.

Note: the MedPAC (2013) report on the reading list (optional reading) provides a great overview of the BPCI program and may help you think about these questions, particularly pp 59-62.

Consider two conditions:

Condition 1: analysts believe patients admitted to the hospital for Condition 1 are often unnecessarily discharged to an institutional post-acute care provider (for example, a skilled nursing facility or inpatient rehabilitation facility) where a home health provider could provide care more efficiently and effectively.

Condition 2: analysts believe that institutional post-acute care (such as SNF care) is very often clinically necessary after a hospital discharge for Condition 2. However, there is a high incidence of unnecessary hospital readmissions from post-acute care providers for patients with Condition

In addition, analysts believe SNF stays are too long for patients with Condition 2.

A. Separately describe which BPCI model is the best match for Condition 1 and 2. In each case, justify your decision by describing which contracting entity is in a better position to improve the efficiency and effectiveness of care, and explicitly describe the change in payment incentives from traditional Medicare to bundled payment for the contracting entity. (6 points)

B. Explain an unintended consequence of bundled payment and describe a feature of BPCI that may offset this incentive. (2 points)

C. List and describe at least one advantage and one disadvantage to having a longer duration episode covered by the bundled payment. (4 points)

D. The goal of bundled payment is to produce a set of incentives to deliver care that maximizes both quality and efficiency. In the week 5 lecture, we considered alternative theories for the existence and behavior of nonprofit hospitals. Under which theory would you expect the largest change in treatment patterns when payment switches from fee-for-service to bundled payment? Provide support for your answer. (2 points)

 
 

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Allocating Fixed Costs and Budgeting

Module 4 – SLP

Allocating Fixed Costs and Budgeting

This SLP has two parts.

Part I

Herrestad Company does produce and sell two products and the details below will be used to prepare a segmented income statement (showing the income for each product and the total) for the company. Use ABC to allocate all fixed costs to the two products.

Background information
Total Prod A Prod B
Beginning inventory 0
Units produced 10,000 2,500 7,500
Units sold 8,000 2,000 6,000
Selling price per unit $255 480 180
Variable costs per unit
Direct material 100 280 40
Direct labor 60 60 60
Variable overhead 25 40 20
Variable selling and admin. exp. 10 13 9
Fixed costs
Fixed manufacturing overhead 200,000
Fixed selling and administrative 100,000
Production runs (not $) 100 65 35
Number of sales reps (not $) 25 15 10

Here are the first few lines of the segmented income statement to help you get started. Complete the statement in good format and make sure you allocate the fixed costs to the two products. When done, comment on the information and the relative profitability of the two products.

Herrestad Company
Segmented Income Statement for the period ending Dec. 31, 2015
A B Total
Sales $960,000 $1,080,000 $2,040,000
Variable costs:
Direct material 560,000 240,000 800,000

Part II

Differential analysis involves knowing which costs are relevant, i.e. future costs that vary among alternatives. It is important to know what information to use and not just how to execute the analysis.

Herrestad Company receives an offer to make a new product, called C, for a new customer. The customer wants to buy 1,000 units. Product C has the same cost structure as product B with three exceptions. The new customer is only willing to pay $150 per unit, direct materials costs will decrease by $12 per unit and Herrestad does not have to incur any variable selling and administrative expenses.

  • Make a list of the expenses and amounts that are relevant for this decision. How much will the sale of this product contribute to the profitability of Herrestad?
  • What if the company only pays $140 per unit? How does this change the contribution towards profitability?
  • If you were the manager, would you accept this order? What considerations, other than financial would enter into your decision?

This Is a Signature Assignment Expectation for ACC202 Module 4 SLP

There are 2 specific learning outcomes:

  1. apply business theories, models, and concepts to guide analysis of problems and situations
  2. utilize data-driven analysis in making business decisions.

In this SLP assignment for Module 4 our emphasis will be on understanding the concept of relevant costs. You will be summarizing all of what you learned the in the Cases, SLPs, and Discussions.

The grading rubric has been developed to measure student success in meeting the ACC202 Module 4 SLP expectations related to applying your knowledge of relevant costs in the budget process.

SLP Assignment Expectations

  • Demonstrate familiarity with the concept of relevant costs.
  • Write 2-4 pages, showing computations and discussing the results.
  • List supporting references and cite sources.
  • Use appropriate writing style (organization, grammar, & spelling – see Writing Guidelines).
 
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Posted by on June 24, 2017 in Academic Writing

 

Module 4 – SLP Allocating Fixed Costs and Budgeting

Module 4 – SLP

Allocating Fixed Costs and Budgeting

This SLP has two parts.

Part I

Herrestad Company does produce and sell two products and the details below will be used to prepare a segmented income statement (showing the income for each product and the total) for the company. Use ABC to allocate all fixed costs to the two products.

Background information
Total Prod A Prod B
Beginning inventory 0
Units produced 10,000 2,500 7,500
Units sold 8,000 2,000 6,000
Selling price per unit $255 480 180
Variable costs per unit
Direct material 100 280 40
Direct labor 60 60 60
Variable overhead 25 40 20
Variable selling and admin. exp. 10 13 9
Fixed costs
Fixed manufacturing overhead 200,000
Fixed selling and administrative 100,000
Production runs (not $) 100 65 35
Number of sales reps (not $) 25 15 10

Here are the first few lines of the segmented income statement to help you get started. Complete the statement in good format and make sure you allocate the fixed costs to the two products. When done, comment on the information and the relative profitability of the two products.

Herrestad Company
Segmented Income Statement for the period ending Dec. 31, 2015
A B Total
Sales $960,000 $1,080,000 $2,040,000
Variable costs:
Direct material 560,000 240,000 800,000

Part II

Differential analysis involves knowing which costs are relevant, i.e. future costs that vary among alternatives. It is important to know what information to use and not just how to execute the analysis.

Herrestad Company receives an offer to make a new product, called C, for a new customer. The customer wants to buy 1,000 units. Product C has the same cost structure as product B with three exceptions. The new customer is only willing to pay $150 per unit, direct materials costs will decrease by $12 per unit and Herrestad does not have to incur any variable selling and administrative expenses.

  • Make a list of the expenses and amounts that are relevant for this decision. How much will the sale of this product contribute to the profitability of Herrestad?
  • What if the company only pays $140 per unit? How does this change the contribution towards profitability?
  • If you were the manager, would you accept this order? What considerations, other than financial would enter into your decision?

This Is a Signature Assignment Expectation for ACC202 Module 4 SLP

There are 2 specific learning outcomes:

  1. apply business theories, models, and concepts to guide analysis of problems and situations
  2. utilize data-driven analysis in making business decisions.

In this SLP assignment for Module 4 our emphasis will be on understanding the concept of relevant costs. You will be summarizing all of what you learned the in the Cases, SLPs, and Discussions.

The grading rubric has been developed to measure student success in meeting the ACC202 Module 4 SLP expectations related to applying your knowledge of relevant costs in the budget process.

SLP Assignment Expectations

  • Demonstrate familiarity with the concept of relevant costs.
  • Write 2-4 pages, showing computations and discussing the results.
  • List supporting references and cite sources.
  • Use appropriate writing style (organization, grammar, & spelling – see Writing Guidelines).
 
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Posted by on June 23, 2017 in academic writing

 

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Module 4 – Case Allocating Fixed Costs and Budgeting

Module 4 – Case

Allocating Fixed Costs and Budgeting

Case Assignment

This case has two separate parts.

Part I

How can activity-based management and activity-based costing (ABC) benefit an organization? Specifically, address the following points.

  • How does ABC differ from other allocation methods?
  • Describe the main characteristics of ABC.
  • What type of companies tends to benefit from ABC?
  • Comment on a company (research Internet) that has implemented ABC.
    • What type of company is it?
    • Was it successful?

Part II

Please answer the following questions.

  • What are the general benefits of preparing the budget?
  • Discuss how the budget is likely to be used for the control function.
  • Variance analysis is a traditional tool used for planning and control. Comment on advantages and disadvantages of using this approach for performance evaluations.
  • Do you have any suggestions for complementary or alternative performance measures?

The submission should be 3 to 5 pages and need to include answers to all the questions listed above. Include references in APA format.

Assignment Expectations

It is important to answer the questions above. The discussion should be three to five pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.

When your paper is done, upload it to the appropriate dropbox.

 
 

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