O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to customer specifications). O’Leary uses a normal job costing system. Direct labor at O’Leary is paid $18 per hour, but the employees are not paid if they are not working on jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows:

At the beginning of year 3, O’Leary has two jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27, year 2. It is scheduled to ship on January 7, year 3. Job MC-275 is still in progress. The predetermined rate in year 2 was $120 per direct labor hour. Data on direct material costs and direct labor-hours for these jobs in year 2 follow:

During year 3, O’Leary incurred the following direct material costs and direct labor hours for all jobs worked in year 3, including the completion of Job MC-275.

For the purpose of computing the predetermined overhead rate, O’Leary uses the previous year’s actual overhead rate. At the end of year 3, there were four jobs that had not yet shipped. Data on these jobs follow:

Required:

a. What was the amount in the beginning Finished Goods and beginning Work-in-Process accounts for year 3?

b. O’Leary incurred direct materials cost of $57,900 and used an additional 309 hours in year 3 to complete job MC-275. What was the final (total) cost charged to job MC-275?

c. What was over- or underapplied overhead for year 3?

d. O’Leary prorates any over- or underapplied overhead to Cost of Goods Sold, Finished Goods Inventory, and Work-in-Process Inventory. Prepare the journal entry to prorate the Over- or Underapplied Overhead. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

e. A customer has asked O’Leary to bid on a job to be completed in year 4. O’Leary estimates that the job will require about $93,400 in direct materials and 5,090 direct labor-hours. Because of the economy, O’Leary expects demand for its services to be low in year 4, and the CEO wants to bid aggressively, but does not want to lose any money on the project. O’Leary estimates that there would be virtually no sales or administrative costs associated with this job. What is the minimum amount O’Leary can bid on the job and still not incur a loss? (Do not round intermediate calculations.)

General Machinery Company Limited, a subsidiary company of Las Vegas Group Corporation (USA) Limited, is primarily a distributor of a range of machinery and equipment and also engages in other business activities. It has assets of approximately $4m, including current assets of nearly $2m. The draft Statement of Financial Performance of the company has just been completed by the company accountant and presented to the auditors, Disneyland Audit Company Ltd., to enable them to complete their audit. You, as the partner in charge of the audit, is surprised to find out that the company has made a profit this year, because your audit work during and after the end of the financial year had led you to expect a significant loss. The draft Statement of Financial Performance and some of the notes are shown below.

General Machinery Company Limited

Statement of Financial Performance

For the year ended 30 June 1997

Notes to the accounts:

1. Accounting methods

Inventory – the company values spare parts held for its machinery customers at average cost. Costs of spare parts representing more than 3 years’ expected consumption are written off.

2. Operating profit before income tax has been determined after:

Including an abnormal credit $150000, not subject to income tax, resulting from the revaluation of a block of land written off against profits several years ago when a quarrying operation was discontinued; it is now proposed to develop the site as a tavern and service station to serve the growing population of the area.

During your ensuing investigations, you ascertained the following:

1. Land revaluation – is treated as an abnormal item. The company had for some year’s extracted rock and gravel from a block it acquired in a village near Collie. The cost of the block, which was $3000, had been written off many years ago when the useful material was exhausted, but the land title had been retained. In view of the growing prosperity from mining development in the area, the directors had concluded that there were prospects for a tavern and probably a service station and store on the block, and they were now drawing up plans preparatory to applying for rezoning of the land and then either undertaking the project themselves or selling the block and plans. On the basis of the opinion of a local estate agent that ‘residential land of an equivalent area in the village would be worth about $150 000’ the directors have revalued the block in the accounts at that amount. This is the company’s only holding of land.

2. Inventory accounting policy – described in Note 1. The auditors had been concerned for some time at the high value of slow-moving spare parts inventory. They had accepted the financial statements in the previous year because they had not been able to establish that net realizable value was less than cost, but they had requested a reconsideration of inventory valuation in the year just ended. It had been tentatively agreed between the auditors and the directors that a maximum of 2 years’ expected consumption, based on the last 2 years’ sales, should be valued for financial reporting purposes and any surplus written off. The directors have since decided to increase this to 3 years. The cost of the stock on hand representing the additional year’s consumption has been estimated by the auditors at $27000.

3. Factory reorganization – in order to restore its competitive position, the company had over several weeks in May and June been reorganizing its production facilities and replacing some older plant. The planning and execution of the program had absorbed a lot of time of senior personnel and the engineering design office. As a result, the directors had decided to carry forward as non-current assets not only the cost of draftsmen and engineers at their normal rates per hour but also a proportion of the salaries of the senior personnel involved. The auditors were shown time and cost calculations for senior personnel which supported the cost carry forward of $72000. The cost of engineering design carried forward was $56000. The auditors have been assured by the factory manager as well as the financial director that the reorganization will improve productivity. The capitalization of these costs has not been separately disclosed in the financial statements.

You are required to complete the following:

A).    Discuss the reasonableness of the directors’ proposed treatment of the 3 items above. Justify any changes or additional disclosure you would require in order to be able to give an unqualified audit opinion on the financial statements. Assume for the purpose of this part that you are able to satisfy yourself that the company’s continuation in business is not threatened.

B).    Assume now that you have found that the company is fully utilizing its $300000 bank overdraft facility, which is secured over its assets, and your audit investigations have given you serious cause for concern as to the ability of the company to continue in business. Reconsider the treatment of the disclosures that you outlined for A above, and determine the type of audit report to be issued.

C)     The audit has now been completed. A number of difficulties were experienced during the audit, including significant disagreements over the valuation of investment property holdings. You as the audit partner have suggested that the property value was overstated by $10m, a figure which was twice the level of materiality set for the audit. As a result of discussions with the audit committee, the CEO agreed to revise the valuations downward by $8m. All other issues were resolved to the satisfaction of you, resulting in an overall misstatement of the accounts of $2m. The audit partner is now considering the effect of the misstatement on the audit report.

         Discuss the effect of the misstatement on the audit report.

D)     Discuss the auditor’s responsibility for information accompanying a financial report.

Auburn Circular Club Pro Rodeo Roundup

Developed by Jessica Johnson Frazier, Eastern Kentucky University,

and Patricia H. M ounce, University of Central Arkansas                            L

The Business Situation

When Shelley Jones became president-elect of the Circular Club of Auburn, Kansas, she was asked to suggest a new fundraising activity for the club. After a consider­ able amount of research, Shelley proposed that the Circular Club sponsor a pro­ fessional rodeo. In her presentation to the club, Shelley said that she wanted a fundraiser that would ( 1) continue to get better each year, (2) give back to the com­ munity, and (3) provide the club a presence in the community. Shelley's goal was to have an activity that would become an "annual community event" and that would break even the first year and raise $5,000 the following year. In addition, based on the experience of other communities, Shelley believed that a rodeo could grow in popularity so that the club would eventually earn an average of $20,000 annually.

A rodeo committee was formed. Shelley contacted the world's oldest and largest rodeo-sanctioning agency to apply to sponsor a professional rodeo. The sanction­ ing agency requires a rodeo to consist of the following five events: Bareback Riding, Bronco Riding, Steer Wrestling, Bull Riding, and Calf Roping. Because there were a number of team ropers in the area and because they wanted to include females in the competition, members of the rodeo committee added Team Roping and Women's Barrels. Prize money of $3,000 would be paid to winners in each of the seven events. Members of the rodeo committee contracted with RJ Cattle Company, a livestock contractor on the rodeo circuit, to provide bucking stock, fencing, and chutes. Realizing that costs associated with the rodeo were tremendous and that ticket sales would probably not be sufficient to cover the costs, the rodeo com­ mittee sent letters to local businesses soliciting contributions in exchange for various sponsorships. Exhibiting Sponsors would contribute $1,000 to exhibit their products or services, while Major Sponsors would contribute $600. Chute Sponsors would contribute $500 to have the name of their business on one of the six bucking chutes. For a contribution of $100, individuals would be included in a Friends of Rodeo list found in the rodeo programs . At each performance the rodeo announcer would repeatedly mention the names of the businesses and in­ dividuals at each level of sponsorship. In addition, large signs and banners with the names of the businesses of the Exhibiting Sponsors, Major Sponsors, and

Chute Sponsors were to be displayed prominently in the arena.

case 5 Cases for Management Decision-Making

A local youth group was contacted to provide concessions to the public and divide the profits with the Circular Club. The Auburn Circular Club Pro Rodeo Roundup would be held on June 1, 2, and 3. The cost of an adult ticket was set at $8 in advance or $10 at the gate; the cost of a ticket for a child 12 or younger was set at $6 in advance or $8 at the gate. Tickets were not date-specific. Rather, one ticket would admit an individual to one performance of his or her choice­ Friday, Saturday, or Sunday. The rodeo committee was able to secure a location through the county supervisors board at a nominal cost to the Circular Club. The arrangement allowed the use of the county fair grounds and arena for a one-week period. Several months prior to the rodeo, members of the rodeo committee had been assured that bleachers at the arena would hold 2,500 patrons. On Saturday night, paid attendance was 1,663, but all seats were filled due to poor gate con­ trols. Attendance was 898 Friday and 769 on Sunday.

The following revenue and expense figures relate to the first year of the rodeo.

Receipts

Revenue and expense

Contributions   from sponsors                        $22,000                                                          data, year 1

Receipts from ticket sales                                     28,971

Share of concession profits                                     1,513

Sale of programs

- 600

*The club contracted with a local caterer to provide a tent and food for the contestants. The cost of the food was contingent on the number of contestants each evening. Information con­ cerning the number of contestants and the costs incurred are as follows:

$3,341

On Wednesday after the rodeo, members of the rodeo committee met to dis­ cuss and critique the rodeo. Jonathan Edmunds, CPA and President of the Cir­ cular Club, commented that the club did not lose money. Rather, Jonathan said, "The club made an investment in the rodeo."

CA-18                            case 5 Cases for Management Decision-Making

Instructions

Answer each of the following questions.

Do you think it was necessary for Shelley Jones to stipulate that she wanted a fundraiser that would (1) continue to get better each year; (2) give back to the community, and (3) pro­ vide the dub a presence in the community? Why or why not?

What did Jonathan Edmunds mean when he said the club had made an investment in the rodeo?

Is Jonathan's comment concerning the investment consistent with Shelley's idea that the club should have a fundraiser that would (1) continue to get better each year, (2) give back to the community, and (3) provide the club a presence in the community? Why or why not?

. What do you believe is the behavior of the rodeo expenditures in relation to ticket sales?

Determine the fixed and variable cost components of the catering costs using the high­ low method.

Assume you are elected chair of the rodeo committee for next year. What steps would you suggest the committee take to make the rodeo profitable?

Shelley, Jonathan, and Adrian Stein, the Fundraising Chairperson, are beginning to make plans for next year'srodeo. Shelley believes that by negotiating with local feed stores, inn­ keepers, and other business owners, costs can be cut dramatically. Jonathan agrees. After carefully analyzing costs, Jonathan has estimated that the fixed expenses can be pared to approximately $51,000. In addition, Jonathan estimates that variable costs are 4% of total gross receipts.

After talking with business owners who attended the rodeo, Adrian is confident that funds solicited from sponsors will increase. Adrian is comfortable in budgeting revenue from sponsors at $25,600. The local youth group is unwilling to provide con­ cessions to the audience unless they receive all of the profits. Not having the personnel to staff the concession booth, members of the Circular Club reluctantly agree to let the youth group have 100% of the profits from the concessions. In addition, members of the rodeo committee, recognizing that the net income from programs was only $100, decide not to sell rodeo programs next year. Compute the break-even point in dollars of ticket sales assuming Adrian and Jonathan are correct in their assumptions.

Shelley has just learned that you are calculating the break-even point in dollars of ticket sales. She is still convinced that the Club can make a profit using the assump­ tions in number 7 above.

Calculate the dollars of ticket sales needed in order to earn a target profit of

$6,000.

Calculate the dollars of ticket sales needed in order to earn a target profit of

$12,000.

Are the facilities at the fairgrounds adequate to handle crowds needed to generate ticket revenues calculated in number 8 above to earn a $6,000 profit? Show calcula­ tions to support your answers.

Prepare a budgeted income statement for next year using the estimated revenues from sponsors and other assumptions in number 7 above. In addition, use ticket sales based on the target profit of $12,000 estimated in 8(b). The cost of the livestock contractor, prize money, sanctioning fees, entertainment, judging fees, rent, and utilities will re­ main the same next year.

Changes in expenses include the following: Members of the Club have decided to eliminate all costs related to contestant hospitality by soliciting a tent and food for the contestants and taking care of the "Contestant Hospitality Tent" themselves. The county has installed permanent restrooms at the arena, eliminating the need to rent port-a­ potties. The rodeo committee intends to pursue arrangements to have hotel rooms, hay, and children's hats provided at no charge in exchange for sponsorships. The cost of ban­ ners varies with the number of sponsors. Signs and More charged the Circular Club

$130 for each Exhibiting Sponsor banner and $48 for each Major Sponsor banner. At this time there is no way to know whether additional sponsors will be Exhibiting Spon­ sors or Major Sponsors. Therefore, for budgeting purposes you should increase the cost of the banners by the percentage increase in sponsor contributions. (Hint: Round all calculations to three decimal places.) By checking prices, the Circular Club will be able to obtain insurance providing essentially the same amount of coverage as this year for only $600. For the first rodeo the Club ordered 10,000 tickets. Realizing the con­ straints on available seating, the Club is ordering only 5,000 tickets for next year, and therefore its costs are reduced 50%. The sand for the arena for next year will be $300, and miscellaneous fixed costs are to be budgeted at $100.

A few members in the Circular Club do not want to continue with the annual rodeo. However, Shelley is insistent that the Club must continue to conduct the rodeo as an annual fundraiser. Shelley argues that she has spent hundreds of dollars on western boots, hats, and other items of clothing to wear to the rodeo. Are the expenses related to Shelley's purchases of rodeo clothing relevant costs? Why or why not?

Rather than hire the local catering company to cater the Contestant Hospitality Tent, members of the Circular Club are considering asking Shady's Bar-B-Q to cater the event in exchange for a $600 Major Sponsor spot. In addition, The Fun Shop, a local party supply business, will be asked to donate a tent to use for the event. The Fun Shop will also be given a $600 Major Sponsor spot. Several members of the Club are opposed to this consideration, arguing that the two Major Sponsor spots will take away from the money to be earned through other sponsors. Adrian Stein has explained to the mem­ bers that the Major Sponsor signs for the arena cost only $48 each. In addition, there is more than enough room to display two additional sponsor signs. What would you encourage the Club to do concerning the Contestant Hospitality Tent? Would your an­ swer be different if the arena were limited in the number of additional signs that could be displayed? What kind of cost would we consider in this situation that would not be found on a financial statement?

Read the scenario below and answer the questions that follow in your role as a member of the senior management team at Oakwood. You are reviewing budgets and actual results for the month of April for the various business activities and today, you are focusing on Golf Cart Rentals. In the recent past, there has been some tension between the management of Golf Cart Rentals and Golf Course Operations, so some information about Golf Course Operations is included below.

About Oakwood

Oakwood is a resort hotel with tennis courts, swimming pools, three golf courses, restaurants, and many other fine amenities. The resort’s management structure is highly decentralized because each business activity is quite different and requires a different set of managerial skills, experience, and staffing. For example, being a good hotel dining room manager requires a completely different set of skills and experiences than being a good golf course pro shop manager. Oakwood believes that the decentralized structure is a key success factor in its strategy and tries to operate every one of its business activities as a profit center unless the activity does not have a measurable revenue stream. Those activities are managed as cost centers. Two of the most important activities in Golf Division are Golf Course Operations and Golf Cart Rentals. Each of these activities are managed as profit centers because each has an identifiable revenue stream and each requires a specific set of managerial skills to be successful.

Golf Cart Rentals

Oakwood customers who wish to play golf may either rent a cart or walk the course. They only pay a cart rental fee if they rent a cart. The Golf Cart Rentals profit center’s revenue each month is the total of the cart rental fees. Jay MacDonald (“Mac”) is the manager of the Golf Cart Rentals profit center and he supervises all business activities related to rentals of motorized golf carts at Oakwood. The carts are leased from various vendors and Mac negotiates these leases. Most vendors like to lease for two or three years, but one of Mac’s valuable skills is his ability to make good deals with golf cart suppliers. His crafty negotiations have given Oakwood a portfolio of lease rental terms ranging from three months to three years at very good rates.

Mac manages the golf cart maintenance crew that keeps the 200-cart fleet clean, properly fueled with oil and gas, and that makes minor repairs on the carts. The carts are solidly built and rarely need major repairs as long as they are properly maintained, and Mac does a good job of hiring and keeping skilled mechanics who excel at maintenance and minor repairs. He always says that paying a little more is worth it to get hard-working, competent workers, and the golf cart maintenance crew does have a higher average pay rate than most of the other Golf Division employees. As a result of this excellent maintenance program, the few carts that do need major repairs are usually old and about to go off-lease anyway. So, instead of repairing them, Mac just takes them out of service and replaces them in the next round of leasing. The accounting department records the salaries and related costs (payroll taxes and benefits) in the Labor account.

Two years ago, Mac installed large underground tanks (one for gas and one for oil) so Oakwood could buy in bulk and get quantity discounts. This has worked out well and has reduced oil and gas costs so much that the cost of the tanks and installation will be recaptured at the end of this year. The distributor’s tanker trucks, one for oil and one for gas, stop by every three or four weeks to refill the tanks. The accounting department records these costs in the Gas and oil expense account when they get the invoice for each delivery, usually a few days after the delivery.

Golf Course Operations

Sandra Bunker (“Sandy”) is the manager of Golf Course Operations. A major part of her job is supervising golf course maintenance and repair. A resort golf course must be in excellent condition to draw resort guests and others to the course. Thus, the condition of the course is an important part of the entire resort’s reputation. Oakwood has had several marketing research studies done over the years and all of them confirm that when a resort’s golf course falls into poor condition, everything from dining room revenue to room rental revenue suffers.

Golf Course Operations is a profit center and its revenue is the total of greens fees collected from resort guests and others to play on the golf courses. Costs charged to Golf Course Operations include grounds crew salaries and benefits, the cost of outsourced services such as planting and trimming the trees and bushes that line the fairways, and the cost of supplies such as fertilizer, grass seed, bedding flowers, sand, and various kinds of mulch. The grounds crew workers are mostly unskilled laborers who are generally paid just a little more than the minimum wage.

Weather conditions are an important factor in the overall profitability of any golf course. Rainy or cold weather will reduce the number of golfers who play the course, but even more important is that the condition of the course can be affected by how it is used when it has become wet. If rain continues for several days or the rain amounts are unusually high, the course can become waterlogged. Operating golf carts on a waterlogged course can do serious and permanent damage to the turf. To prevent permanent turf damage, Sandy can choose to close the course to golf carts entirely, or she can have the grounds crew restrict golf cart use by placing rope fences around the wet areas. A course that is closed to carts can still generate greens fees paid by golfers who are willing to walk the course. On rare occasions, the course will become so wet that Sandy will close the course to all golfers. Sandy determines whether each course will be open or closed due to weather conditions on any particular day. She also determines whether players can use golf carts. As you might imagine, Sandy does hear from Mac on days when she prohibits golf carts, but Sandy does have the final say in that decision since the condition of the golf courses is, ultimately, her responsibility. Sandy is on the courses each morning at dawn supervising the maintenance crews, so she is in a good position to decide whether to rope off just the wettest parts of the course and allow carts, prohibit carts, or close the course entirely.

A Rainy April at Oakwood

This April, golf cart operating profits were extremely low, amounting to a mere 49% of budgeted profits. When you discussed this matter with Mac, he explained that the poor results were caused by the unusually heavy rains in April. He complained that Sandy had closed entire courses to carts on several days when only parts of the courses were too wet to tolerate the carts safely. He argued that, on those days, guests could play the courses (and generate revenue for Sandy), but they could not drive carts, which shut his revenue off completely. Note: Guests are not permitted to drive carts in roped off areas of a golf course; but they can rent carts and drive them elsewhere on the course. If an entire course is roped off, guests cannot rent carts at all when playing that course on that day.

Mac said he had overheard Sandy’s grounds crew members talking among themselves on the days that entire courses were closed to carts. He had heard the crew members saying that they were too busy to rope off just the wet areas and that they had gone ahead and closed entire courses to cart traffic instead because it was easier to do that than to spend time roping off the wet areas. You could see that Mac was not happy about this. In your conversation with Mac, for example, he compared the grounds crew unfavorably to his golf cart maintenance crew, noting that his crew were all hard working employees and not “lazy” like the grounds crew.

When you met with both Mac and Sandy, you learned that they communicate regularly and often share the same opinions about the operation of Oakwood as a whole. Your impression is that they generally work together in a positive and cooperative manner to resolve issues that arise. But you do see that the decisions Sandy makes about roping off the courses (or parts of the courses) are a consistent source of concern for Mac.

The resort’s controller, Ampzilla Forkwort, developed a flexible budget analysis for April that she says will help you better analyze Mac’s results. Her analysis for the month appears below (F indicates a favorable variance, U indicates an unfavorable variance):

Requirements:

Your solution should be written in single-spaced text, included in one Microsoft Word or RTF document, and should address specifically the following four questions (you do not need to reprint the questions in your solution, but do number your answers):

1. Most accountants would argue that a flexible budget is good to use when calculating variances on variable costs (such as gas and oil). In 100 words or less, using the knowledge about accounting you have gained in this course and the facts presented in the case narrative, identify and describe the most likely cause of the $900 unfavorable variance on gas and oil expense and explain the basis for your belief.

2. Categorize Mac’s performance for April using this rating scheme: “Really Great,” “Pretty Much OK,” or “Really Awful.” In 100-200 words, explain why you ranked him as you did.

3. Assume you decide to start measuring Mac’s performance using the flexible budget (experienced businesspersons with MBAs would call that “flexing out the volume effect”). In 100-200 words, describe the most likely effects (intended and unintended) of using this measure on the quality of the cart rental fleet and the profitability of the cart rental operation in the future. In your answer, describe any assumptions you make and be sure to state clear, logical arguments that lead to your conclusions.

4. A conflict between the interests of Mac and Sandy might exist in this situation. One might argue that having each of these managers achieve their goals separately might not lead to the best results for Oakwood as a whole. In 100-200 words, describe any conflict that exists here and suggest possible solutions that would better align the goals of these managers with the overall goals of Oakwood. Remember that Sandy and Mac communicate regularly and work out most issues in a friendly way, (other than the issue of closing courses to carts because of weather-related conditions) so suggesting they communicate better is not going to be a solution here. Also, remember that Oakwood has a strong policy of decentralization and that Mac and Sandy each have valuable knowledge about their specific operations that Oakwood wants to make sure they use effectively in managing their respective operations.

CASE STUDY - LG Electronics

From its origins as the progenitor of South Korea’s electronics industry and then its first global exporter, LG Electronics has evolved to a respected global brand with manufacturing facilities in China, India, Mexico, Brazil, Poland, and Russia and a presence in 49 countries. Headquartered in Seoul, South Korea, the company has 84,000 employees in 112 locations around the world, including 81 subsidiaries. Perhaps best known today for its quality mobile phones, LG Electronics is also one of the world’s top manufacturers of flat-screen televisions, air conditioners, washing machines, and refrigerators. Led primarily by exploding demand for flat-screen televisions and mobile phones in the past 15 years, LG Electronics’ European operations grew exponentially. By 2015, its logistics network was inadequate and severely overtaxed. Most of its transportation needs were outsourced to third-party logistics (3PL) providers. Internal knowledge and expertise were nonexistent. LG Electronics Europe wanted to change this equation. By creating a collaborative effort with its partners, LG believed that it could better control coordination of its transportation networks and realize aggregate cost savings. Management was clamoring for increased logistics visibility so that it could preempt bottlenecks rather than fashioning reflexive, and often imprudent, remedies. Dependent on their 3PL providers, managers had little to no control over transportation planning. Fixed routing in outsourced systems hamstrung management’s ability to optimize carriers, loads, and overall capacity. In order to control performance and costs, LG Electronics Europe knew it had to take control of its logistics system and adopt robust performance evaluation tools so that it could continually adapt and revise transportation decisions. LG Electronics already had a relationship with JDA Software, a leading vendor of supply chain management systems, employing many of its products in localities across the globe. Impressed with JDA’s global presence and armed with positive reports about its partnerships with other divisions, LG Electronics Europe chose JDA Software’s Intelligent Fulfillment solutions— Transportation Modeler, Transportation Manager, and Transportation Planner. The ease of use and exceptional data-sharing capabilities of this unified supply chain planning, optimization, and business analytics platform immediately drew favorable reviews.Once all managers could log in to a single source where all logistics data were shared, they could collaborate to find the most efficient and cost-effective transportation options. Transportation strategies could now be flexible and easily adapted to respond to fluctuations in product demand, shipping rates, fuel costs, and other factors. LG used JDA Transportation Modeler to model an ideal logistics system that consolidated orders, established transportation hubs, and selected carriers in a flexible manner based on costs and service levels. With Transportation Modeler, LG Electronics Europe can assess the abilities of alternative transportation hubs and associated carriers to optimize order consolidation. What-if scenarios examine various requirements and objectives to design possible networks and outline the best way to run them. Once a logistics system model has been settled upon, it is run through Transportation Manager to generate a new network. Transportation orders can then be dynamically managed. What’s more, cross-company workflows now connect LG Electronics Europe to its supplier network. Rather than ceding control to its 3PL providers, LG works in partnership with them. Freight audits reveal comprehensive statistical insight into logistics spending. Truck-loading efficiency ratios are used to optimize the vehicle-miles needed to transport like tonnages of freight. Consolidation ratios show how to combine two or more shipments to yield maximum cost savings. Transportation Planner then weighs product availability, customer delivery commitments, and facility, inventory, and transportation network constraints to create benchmarks. By focusing managerial attention only on activities that fall outside of these accepted norms, labor productivity is maximized. This built-in exception-based management functionality minimizes the need for human intervention and review. Three-dimensional load building automatically uses order line data to optimally configure pallets, taking into account weights, dimensions, stacking protocols, and other factors. A web-enabled interface displays this customizable 3-D view, and a Gantt bar chart illustrates the project schedule for dock and vehicle utilization. All transportation plans are archived so that they can be used in historical analysis and future what-if scenario construction, and previous asset allocations and carrier assignments are considered as new transportation plans are created. Multiple users can access and edit any active plan. As LG Electronics Europe’s users became comfortable with the system, they progressed beyond basic tasks such as loading trucks and scheduling deliveries to more complex issues including managing tariffs and checking for invoice duplication. Workload efficiency was bolstered by the ability to access realtime information, the exception-based management tools, and the ability to tailor logistics to local environments. Managers quickly gained confidence in their logistics decision making. Investing in JDA Services—Consulting, Education, Performance Engineering, and Support Services— provided valuable support with system implementation. Although change was introduced systematically with a comprehensive training regimen, LG Electronics Europe’s transportation manager, Menno Cleton, was thankful to have JDA consultants during the final three steps of the seven-step JDA Enterprise Methodology (JEM): Deploy, Transition, and Evolve. These experts walked users through equipment use, interface details, tool usage minutiae, and other miscellaneous issues. In addition, LG participated in a JDA Special Interest Group (SIG), which organized and supervised group meetings with other JDA customers to share experiences and offer peer-to-peer support. A true supply chain transportation knowledge base and increased visibility into LG’s transportation 3. How did implementing JDA Software solutions change the way LG ran its business? 4. How did LG’s new logistics and transportation management system improve management decision making? Describe two decisions that the new system solution improved. 5. Build the Organization, Management and Technology diagram, fill it in correctly and report it in details in written form. network quickly produced significant cost savings, yielding a generous profit. Dedicated performance analysis using the built-in business intelligence (BI) tools resulted in improvements in all transportation metrics. Managers can now see a load plan’s optimized cost compared with its implemented cost or how shipment costs are calculated from loads along with 60 other key metrics by selecting a report or dashboard directly within their current transportation workflow. Improved service (in-stock) levels, faster order cycle times, reduced time to implementation, and improvements in the freight audit process have all been achieved. LG Electronics Europe can now also assess the performance of its carriers and allocate loads accordingly. Improved service levels have yielded increased customer satisfaction. Consolidation ratios in all implementations saw a 10 percent improvement, and optimized load configurations improved truck-loading efficiency ratios. In partnership with its 3PL providers, LG Electronics Europe is poised for continuing improvement in its service levels and adoption of additional JDA solutions.

Question

1)Identify the supply chain management problems LG Electronics faced. What was the business impact of its inability to manage its supply chain well?

Prepare journal entries, income statement, statement of retained earnings and analysis for the following:

For Analysis

7. The following is an article about a young man who died of plague in 2015. Based on the information provided, you can correctly determine that this very unfortunate death was due to ______.

DENVER (AP/CBS4) – When a Larimer County teen came down with a high fever and muscle aches, his family thought he had the flu. But he was dead within days and the rare cause was only revealed later. Taylor Gaes had been infected with the plague, likely by fleas that put the bacteria directly into his blood stream, making it difficult to spot in time to stop its spread. The 16-year-old died June 8, but the cause was only made public late Friday when health officials, at the urging of the boy’s parents, put out a warning to make sure others who may have visited his family’s rural home near Fort Collins hadn’t been sickened by the fleas that could have infected him.

a. bubonic plague

b. primary pneumonic plague

c. septicemic plague

d. secondary pneumonic plague

8. Which of the following is/are beta-lactam drugs? (Choose all correct answers.)

sulfa drugs

penicillins

cephalosporins

bacitracin

aminoglycosides

vancomycin

11. Which, if any, of the following is NOT true of methicillin?

a. methicillin inhibits PBP2a (penicillin-binding protein 2A)

b. methicillin resembles D-Ala-D-Ala

c. methicillin prevents cross-linking in the peptidogly

d. can All of the above are true of methicillin.

The company has the following account balances on June 1, 2020. (all accounts have their ‘normal’ balances)

Drawings: 1000

Cash: 20000

Service revenue: 50000

Capital: 15000

Depreciation Expense: 700

Equipment: 30000

Accounts Payable: 5000

Insurance Expense: 500

Unearned Service Revenue: 4000

Prepaid Service Revenue: 500

Accounts Receivable: 4000

Rent Expense: 5000

Salaries Expense: 16000

Accumulated Depreciation - Equipment: 3000

During June 2018, the following events took place. Where appropriate, record a journal entry for each transaction. If no journal entry is required, write ‘no entry’.

1. On June 2, the company prepaid rent for July to September for $6,000.

2. On June 8, someone invested $3,000 cash and a computer system valued at $2,000 into the company.

3. On June 10, the company collected $4,000 it was owed on account.

4. On June 15, The company provided a quotation for membership fees to a corporation looking to provide fitness benefits to its employees. The quotation was for $10,000. The corporation will decide next month if it is a good fit.

5. On June 22 the company provided product and collected $5,000.

6. On June 24 the company received a $1,000 bill for advertising expense that it will pay in the near future.

7. On June 27 the company paid $2,000 cash on account.

8. On June 29, the owner withdrew $600 for personal use.

1. On June 30, the company purchased $1,000 of supplies on account.

10. On June 30, the company paid employee salaries of $3,000.

Explanation is needed if the item needs to to be calculated.