Storage Sheds & More, Inc. manufactures and sells steel-sided easy-assembly storage sheds in the Midwestern region of the United States. The firm’s customers tend to live in smaller cities, towns, and rural areas in this portion of the country. Storage Sheds & More is headquartered in Sioux Falls, SD and was founded nearly 30 years ago by Roger Rude.

            Although the firm has been quite successful over its years of operation, Mr. Rude has noticed a down-turn in the sales of the “Garden Shed,” which was the firm’s best-selling product for many years. Mr. Rude has asked you to complete a breakeven analysis for him on this product. He has supplied you with the following information about the Garden Shed:

• The current selling price per unit (P) is $6,500.
• The variable cost per unit (VC) is $4,800. This includes the raw materials, direct labor, and applicable factory overhead costs to manufacture this product.
• The annual fixed costs (F) at the manufacturing facility applicable to the Garden Shed product total $3,250,000.

Given this information, please answer the following questions about the current breakeven point for the Garden Shed product:

1. What is the operating breakeven point in units for this product?

1. Using the operating breakeven point in units that you calculated in Question #1, what is the breakeven point in sales dollars for the Garden Shed product?

2. Mr. Rude now provides you with actual sales units for the Garden Shed product for the most recent fiscal year. According to his records, 2,450 Garden Sheds were sold in the most recent year. Calculate the operating profit (or operating loss) that the firm realized on the sale of these Garden Sheds.

3. Mr. Rude now informs you that he is considering automating the Garden Shed production line further. The new equipment that he is considering purchasing would produce a higher quality product, he believes, which may have a positive impact on sales. If the equipment is purchased, he plans to hold the selling price (P) of the Garden Shed constant at its current level: $6,500. However, the production costs will change, as follows:

• The new variable cost per unit (VC) will be $2,100.
• Fixed costs (F) applicable to the Garden Shed will total $5,200,000 for the fiscal year.

1. What is the new operating breakeven point in units for the Garden Shed, based on these new assumptions that feature a more automated production line?

2. Based on the new operating breakeven point in units that you calculated in Question #3.a., what is the new operating breakeven point for the Garden Shed in sales dollars?

4. Do you recommend that Storage Sheds & More continue with their current production process for the Garden Shed product or convert to the new, more automated, production process? Please describe.

Please answer with Excel Formulas:

Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, had been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smart phone that has all the features of the existing one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone. Conch Republic can manufacture the new smart phone for $185 each in variable costs. Fixed costs for the operation are estimated to run $5.3 million per year. The estimated sales volume is 74,000, 95,000, 125,000, 105,000, and 80,000 per year for the next five years, respectively. The unit price of the new smart phone will be $480. The necessary equipment can be purchased for $38.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.4 million. As previously stated, Conch Republic currently manufactures a smart phone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smart phone, sales will be 80,000 units and 60,000 units for the next two years, respectively. The price of the existing smart phone is $310 per unit, with variable costs If of $125 each and fixed costs of $1,800,000 per year.If Conch Republic does introduce the new smart phone, sales of the existing smart phone will fall by 15,000 units per year, and the price of the existing units will have to be lowered to $275 each. Net working capital for the smart phones will be 20 percent of sales and will occur with the timing of the cash flows for the year, for example, there is no initial outlay for NWC, but changes in NWC will first occur in year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a 12 percent required return. Shelly has asked Jay to prepare a report that answers the following questions:

Questions 1. What is the payback period of the project?

2. What is the profitability index of the project?

3. What is the IRR of the project?

4. What is the NPV of the project?

Conch Republic Electronics, Part 1Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company’s finance department. One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market, and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing smartphone but adds new features such as WiFi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone. Conch Republic can manufacture the new smartphones for $220 each in variable costs. Fixed costs for the operation are estimated to run $6.4 million per year. The estimated sales volume is 155,000, 165,000, 125,000, 95,000, and 75,000 per year for the next five years, respectively. The unit price of the new smartphone will be $535. The necessary equipment can be purchased for $43.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $6.5 million. As previously stated, Conch Republic currently manufactures a smartphone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smartphone, sales will be 95,000 units and 65,000 units for the next two years, respectively. The price of the existing smartphone is $385 per unit, with variable costs of $145 each and fixed costs of $4.3 million per year. If Conch Republic does introduce the new smartphone, sales of the existing smartphone will fall by 30,000 units per year, and the price of the existing units will have to be lowered to $215 each. Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year; for example, there is no initial outlay for NWC, but changes in NWC will first occur in Year 1 with the first year’s sales. Conch Republic has a 21 percent corporate tax rate and a required return of 12 percent. Shelley has asked Jay to prepare a report that answers the following questions.

QUESTIONS

1.What is the payback period of the project?

2.What is the profitability index of the project?

3.What is the IRR of the project?

4.What is the NPV of the project?

Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company’s finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market, and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Page 349Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing smartphone but adds new features such as WiFi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.

Conch Republic can manufacture the new smartphones for $220 each in variable costs. Fixed costs for the operation are estimated to run $6.4 million per year. The estimated sales volume is 155,000, 165,000, 125,000, 95,000, and 75,000 per year for the next five years, respectively. The unit price of the new smartphone will be $535. The necessary equipment can be purchased for $43.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $6.5 million.

As previously stated, Conch Republic currently manufactures a smartphone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smartphone, sales will be 95,000 units and 65,000 units for the next two years, respectively. The price of the existing smartphone is $385 per unit, with variable costs of $145 each and fixed costs of $4.3 million per year. If Conch Republic does introduce the new smartphone, sales of the existing smartphone will fall by 30,000 units per year, and the price of the existing units will have to be lowered to $215 each. Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year; for example, there is no initial outlay for NWC, but changes in NWC will first occur in Year 1 with the first year’s sales. Conch Republic has a 21 percent corporate tax rate and a required return of 12 percent.

Shelley has asked Jay to prepare a report that answers the following questions.

    What is the payback period of the project?

    What is the profitability index of the project?

    What is the IRR of the project?

    What is the NPV of the project?

CASE 4 CONCH REPUBLIC ELECTRONICS Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company’s finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market, and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing smartphone but adds new features such as WiFi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.

Conch Republic can manufacture the new smartphones for $220 each in variable costs. Fixed costs for the operation are estimated to run $6.4 million per year. The estimated sales volume is 155,000, 165,000, 125,000, 95,000, and 75,000 per year for the next five years, respectively. The unit price of the new smartphone will be $535. The necessary equipment can be purchased for $43.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $6.5 million.

As previously stated, Conch Republic currently manufactures a smartphone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smartphone, sales will be 95,000 units and 65,000 units for the next two years, respectively. The price of the existing smartphone is $385 per unit, with variable costs of $145 each and fixed costs of $4.3 million per year. If Conch Republic does introduce the new smartphone, sales of the existing smartphone will fall by 30,000 units per year, and the price of the existing units will have to be lowered to $215 each. Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year; for example, there is no initial outlay for NWC, but changes in NWC will first occur in Year 1 with the first year’s sales. Conch Republic has a 21 percent corporate tax rate and a required return of 12 percent. Shelley has asked Jay to prepare a report that answers the following questions.

1. What are operating cash flows from Year 1 to Year 5 of the project? What are net cash flows for each year? Show details of your working.

2. What is the payback period of the project?

3. What is the profitability index of the project?

4. What is the IRR of the project?

5. What is the NPV of the project?

Conch Republic Electronics is a mid-sized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company's finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market, and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smart phone that has all the features of the existing smart phone but adds new features such as WiFi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone.

Conch Republic can manufacture the new smart phones for $185 variable costs. Fixed costs for the operation are estimated to run $5.3 million per year. The estimated sales volume is 74,000, 95,000, 125,000, 105,000, 80,000 per year for the next five years, respectively. The unit price of the new smart phone will be $480. The necessary equipment can be purchased for $38.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.4 million.

As previously stated, Conch Republic currently manufactures a smart phone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smart phone, sales will be 80,000 units and 60,000 units for the next two years, respectively. The price of the existing smart phone is $310 per unit, with variable costs of $125 each and fixed costs at $1.8 million per year. If Conch Republic does introduce the new smart phone, sales of existing smart phones will fall by 15,000 units per year, and the price of the existing units will have to be lowered to $275 each. Net working capital for the smart phones will be 20 percent of sales and will occur with the timing of the cash flows for the year; for example, there is no initial outlay for NWC, but changes in NWC will first occur in Year 1 with the first years' sales. Conch Republic has a 35 percent corporate tax rate and a 12 percent required return.

Shelley has asked Jay to prepare a report that answers the following questions:

1. What is the payback period of the project?

2. What is the profitability index of the project?

3. What is the IRR of the project?

4. What is the NPV of the project?

XYZ Electronics is a mid-sized electronics manufacturer located in Germany. The company president is Mark Johnson, who inherited the company. When it was founded, over 70 years ago, the company originally repaired radios and other household appliances. Over the years the company expanded into manufacturing, and is now a reputable manufacturer of various electronic items. Sam Smith, a recent MBA graduate, has been hired by the company’s finance department.

One of the major revenue-producing items manufactured by XYZ is a personal digital assistant (PDA). XYZ currently has one PDA model on the market, and sales have been excellent. The PDA is a unique item in that it comes in a variety of tropical colours and is pre-programmed to play Billy Bragg music. However, as with any electronic item, technology changes rapidly, and the current PDA has limited features in comparison with newer models. XYZ spent €750,000 to develop a prototype for a new PDA that has all the features of the existing PDA but adds new features such as cell-phone capability. The company has spent a further €200,000 for a marketing study to determine the expected sales figures for the new PDA.

XYZ can manufacture the new PDA for €155 each in variable costs. Fixed costs for the operation are estimated to be €4.7 million per year. The estimated sales volumes are 74,000, 95,000, 125,000, 105,000 and 80,000 per year for the next five years, respectively. The unit price of the new PDA will be €360. The necessary equipment can be purchased for €21.5 million, and will be depreciated using the 20 per cent reducing-balance method. It is believed the value of the equipment in five years will be €4.1 million.

As previously stated, XYZ currently manufactures a PDA. Production of the existing model is expected to be terminated in two years. If XYZ does not introduce the new PDA, sales will be 80,000 units and 60,000 units for the next two years, respectively. The price of the existing PDA is €290 per unit, with variable costs of €120 each and fixed costs of €1,800,000 per year. If XYZ does introduce the new PDA, sales of the existing PDA will fall by 15,000 units per year, and the price of the existing units will have to be lowered to €255 each. Net working capital for the PDAs will be 20 per cent of sales, and will occur with the timing of the cash flows for the year: for example, there is no initial outlay for NWC, but changes in NWC will first occur in year 1 with the first year’s sales. XYZ has a 35 per cent corporate tax rate and a 12 per cent required return.

Mark has asked Sam to prepare a report that answers the following questions.

Questions

a) What is the payback period of the project?

b) What is the profitability index of the project?

c) What is the IRR of the project?

d) What is the NPV of the project?

XYZ Electronics is a mid-sized electronics manufacturer located in Germany. The company president is Mark Johnson, who inherited the company. When it was founded, over 70 years ago, the company originally repaired radios and other household appliances. Over the years the company expanded into manufacturing, and is now a reputable manufacturer of various electronic items. Sam Smith, a recent MBA graduate, has been hired by the company’s finance department.

One of the major revenue-producing items manufactured by XYZ is a personal digital assistant (PDA). XYZ currently has one PDA model on the market, and sales have been excellent. The PDA is a unique item in that it comes in a variety of tropical colours and is pre-programmed to play Billy Bragg music. However, as with any electronic item, technology changes rapidly, and the current PDA has limited features in comparison with newer models. XYZ spent €750,000 to develop a prototype for a new PDA that has all the features of the existing PDA but adds new features such as cell-phone capability. The company has spent a further €200,000 for a marketing study to determine the expected sales figures for the new PDA.

XYZ can manufacture the new PDA for €155 each in variable costs. Fixed costs for the operation are estimated to be €4.7 million per year. The estimated sales volumes are 74,000, 95,000, 125,000, 105,000 and 80,000 per year for the next five years, respectively. The unit price of the new PDA will be €360. The necessary equipment can be purchased for €21.5 million, and will be depreciated using the 20 per cent reducing-balance method. It is believed the value of the equipment in five years will be €4.1 million.

As previously stated, XYZ currently manufactures a PDA. Production of the existing model is expected to be terminated in two years. If XYZ does not introduce the new PDA, sales will be 80,000 units and 60,000 units for the next two years, respectively. The price of the existing PDA is €290 per unit, with variable costs of €120 each and fixed costs of €1,800,000 per year. If XYZ does introduce the new PDA, sales of the existing PDA will fall by 15,000 units per year, and the price of the existing units will have to be lowered to €255 each. Net working capital for the PDAs will be 20 per cent of sales, and will occur with the timing of the cash flows for the year: for example, there is no initial outlay for NWC, but changes in NWC will first occur in year 1 with the first year’s sales. XYZ has a 35 per cent corporate tax rate and a 12 per cent required return.

Mark has asked Sam to prepare a report that answers the following questions.

Questions

a) What is the payback period of the project?

b) What is the profitability index of the project?

c) What is the IRR of the project?

d) What is the NPV of the project?

Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company’s finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market, and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Page 349Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing smartphone but adds new features such as WiFi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.

Conch Republic can manufacture the new smartphones for $220 each in variable costs. Fixed costs for the operation are estimated to run $6.4 million per year. The estimated sales volume is 155,000, 165,000, 125,000, 95,000, and 75,000 per year for the next five years, respectively. The unit price of the new smartphone will be $535. The necessary equipment can be purchased for $43.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $6.5 million.

As previously stated, Conch Republic currently manufactures a smartphone. Production of the existing model is expected to be terminated in two years. If Conch Republic does not introduce the new smartphone, sales will be 95,000 units and 65,000 units for the next two years, respectively. The price of the existing smartphone is $385 per unit, with variable costs of $145 each and fixed costs of $4.3 million per year. If Conch Republic does introduce the new smartphone, sales of the existing smartphone will fall by 30,000 units per year, and the price of the existing units will have to be lowered to $215 each. Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year; for example, there is no initial outlay for NWC, but changes in NWC will first occur in Year 1 with the first year’s sales. Conch Republic has a 21 percent corporate tax rate and a required return of 12 percent.

Shelley has asked Jay to prepare a report that answers the following questions.

QUESTIONS

What is the payback period of the project?

What is the profitability index of the project?

What is the IRR of the project?

What is the NPV of the project?

This week's discussion forum is based on your reading on Personality Disorders chapters. Thus, the case vignette enclosed portrays Henry Smith who suffers from two personality disorders. Make sure to justify your diagnoses for your chosen case vignette. This case suffers from two personality disorders therefore you need to justify both diagnoses with specific behaviors. Do not diagnose these cases with any other disorders except personality disorders.

CASE: Case Vignette #2 – Henry Smith

            Henry Smith, a 19-year old college sophomore, was referred to the student health center by a teaching assistant who noticed that he appeared odd, worried, and preoccupied and that his lab notebook was filled with bizarrely threatening drawings.

            Henry appeared on time for the psychiatric consultation.  Although suspicious about the reason for the referral, he explained that he generally “followed orders” and would do what he was asked.  He agreed that he had been suspicious of some of his classmates, believing they were undermining his abilities.  He said they were telling his instructors that he was a “weird guy” and that they did not want him as a lab partner.  The referral to the psychiatrist was, he said, confirmation of his perception.

            Henry described how he had seen two students “flip a coin” over whether he was homosexual or straight.  Coins, he asserted, could often predict the future.  He had once flipped a coin and “heads” had predicted his mother’s illness. He believed his thoughts often came true.  

            Henry had transferred to this out-of-town university after an initial year at his local community college.  The transfer was his parents’ idea, he said and was part of their agenda to get him to be like everyone else and to attend parties and hand out with girls. He said all such behavior was a waste of time.  Although they had tried to push him into moving into the dorms, he had refused, and instead lived by himself in an off-campus apartment.

            With Henry’s permission, his mother was called for collateral information. Henry insisted that he should be present when the call was made to ensure that the psychologist was talking to his mother and not his instructors.  His mother said Henry had been quiet, shy, and reserved since childhood. He had never had close friends, and never dated, and had denied wanting to have friends.  He acknowledged feeling suspicious and anxious at times, but these feelings did not improve when he was around other people and only got worse. He was teased by other kids and would come home upset.  His mother cried while explaining that she always felt bad for him because he never really “fit in”, and that she and her husband had tried to coach him for years without success.  She wondered how a person could function without any social life.

            She added that ghosts, telepathy, and witchcraft had fascinated Henry since junior high school.  He had long thought that he could change the outcome of events like earthquakes and hurricanes by thinking about them.  He had consistently denied substance abuse, and two drug screens had been negative in the prior 2 years.  She mentioned her grandfather had died in an  “insane asylum” many years before Henry was born, but she did not know his diagnosis.

            On examination, Henry was tall, thin, and dressed in jeans and a T-shirt. He was alert and wary and, although nonspontaneous, he answered questions directly.  His affect was flat during the interview and he would often go on tangent and overelaborate on minor details.  He denied feeling depressed or confused.  Henry denied having any suicidal thoughts, plans, or attempts.  He denied having any auditory or visual hallucinations, panic attacks, obsessions, compulsions, or phobias.  His intellectual skills seemed above average and he had a perfect score on his Mental Status Examination.