Chapter  8  Project Time Management

·         Types of Schedules

·         Elements of Time Management

·         Critical Path and Float

·         Managing the Schedule

·         Project Scheduling Software

1. A _________ schedule identifies major types of activities and approximate start and end dates for use in decision making about the scope of the project.

2. A schedule of activities that is prepared every two weeks is the _______ schedule.

3. How does a conceptual schedule differ from a master schedule?

4. If two activities are concurrent and they have the same completion date, they have a _______-_______ relationship.

5. A calendar that shows when a person, facility, or key piece of equipment is available is a __________ calendar.

6. The path through the network diagram that has trnal site.he longest total duration is the __________ path.

7. The difference between the sum of the activity durations along the critical path and the project completion date is the project _______.

8. If two sequential activities overlap and the successor activity can begin three days before the predecessor begins, those three days are called _________ time.

Required:

1. Determine the cost of the inventory on December 31 by the first-in, first-out method.

If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the units PURCHASED MOST RECENTLY first.

Context: Muskogee County Choppers, till recently was a small ‘custom’ motorcycle/chopper production unit, designing and manufacturing custom motorcycles and trikes for a small regional market, mainly Oklahoma and Arkansas. The firm has seen an infusion of capital from a group of rich ‘angel investors’ who had a love for motorcycling. The firm is ‘small’ and even after innovation, capital infusion and growth will in no way match the major players like Harley, Honda, Kawasaki etc. Further, ‘trikes’ unlike motorcycles may be considered a ‘niche’ rather than mass market product.

With this infusion of capital, MCC is now a LLC (Limited Liability Company) and plans to make a foray into major markets, at least catering to Kansas, Missouri, Arkansas , Oklahoma, and New Mexico, starting with a ‘trike’ to compete with the Polaris Spyder or CANAM-Ryker. The MCC Trike is similar, with two front wheels and one rear wheel. It is 500cc, in contrast with other trikes that are normally with higher capacity engines (900 cc +). The Canam Ryker and Polaris Spyder are also like the MCC trike, in that they have two front and one rear wheel, unlike Harley trikes etc that have one front wheel and two rear wheels.

MCC is a new company and even with an infusion of capital from angel investors cannot compete with the financial strength of companies like Harley and Honda.

Develop the 'Contents Page' of a structured approach for MCC’s marketing plan focusing on: (a) Promotional or Integrated Marketing Communications Strategy  (b) Marketing strategy . The junior executives would later follow this structure to develop the details of the plan. . Junior executives would use this as a 'guide' or a sort of rubric to develop the actual content.

1. Electro Fans has just received an order for one thousand 20-inch fans due week 7. Each fan consists of a housing assembly, two grills, a fan assembly, and an electrical unit. The housing assembly consists of a frame, two supports, and a handle. The fan assembly consists of a hub and five blades. The electrical unit consists of a motor, a switch, and a knob. The following table gives lead times, on-hand inventory, and scheduled receipts. See the following data table:
   1. Construct a product structure.
   2. Construct a time-phased product structure.
   3. Prepare a net material requirements plan.

Adventure Expeditions offers guided back-country hiking tours. Adventure Expeditions provides a guide and all necessary food and equipment at a fee of $50 per person per day. Adventure Expeditions currently provides an average of 600 guide-days per month in June, July, August, and September. Based on available equipment and staff, maximum capacity is 800 guide-days per month. Monthly variable and fixed operating costs.

Determine the effect of each of the following situations on monthly profits. Each situation is to be evaluated independently of all others.

1. A $12 increase in the daily fee should result in a 150-unit decrease in monthly sales.
2. A $7 decrease in the daily fee should result in a 300-unit increase in monthly sales. However, because of capacity constraints, the last 100 guide-days would be provided by subcontracting to another firm at a cost of $46 per guide-day.
3. A tour agency has proposed to place a special, one-time order for 75 guide-days at a reduced fee of $45 per guide-day. The agency would pay all insurance costs. There would be additional fixed administration costs of $200.
4. A different tour agency has proposed to place a special, one-time order for 300 guide-days next month at a special fee of $40 per guide-day. The agency would pay all insurance costs. There would be additional fixed administrative costs of $200. Assume additional capacity beyond 800 guide-days is not available.
5. An outdoor supply company has offered to supply all necessary food and rafting equipment at $7.50 per guide-day. This eliminates the current food costs and reduces the monthly equipment rental costs to $1,800.
6. Clients currently must carry a backpack and assist in camp activities such as cooking. Adventure Expeditions is considering the addition of college students to carry all food and equipment and perform activities. This will increase variable costs by $12 per guide-day and fixed costs by $1,000 per month. However, 600 full-service guide-days per month could now be sold at $75 each.

Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $85, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $65 million, a coupon rate of 8 percent, and sells for 95 percent of par. The second issue has a face value of $40 million, a coupon rate of 9 percent, and sells for 108 percent of par. The first issue matures in 23 years, the second in 5 years.

Suppose the most recent dividend was $5.70 and the dividend growth rate is 4 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 38 percent. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Phoenix Inc., a cellular communication company, has multiple business units, organized as divisions. Each division’s management is compensated based on the division’s operating income. Division A currently purchases cellular equipment from outside markets and uses it to produce communication systems. Division B produces similar cellular equipment that it sells to outside customers—but not to division A at this time. Division A’s manager approaches division B’s manager with a proposal to buy the equipment from division B. If it produces the cellular equipment that division A desires, division B will incur variable manufacturing costs of $60 per unit.

Relevant Information about Division B

Sells 75,000 units of equipment to outside customers at $130 per unit

Operating capacity is currently 80%; the division can operate at 100%

Variable manufacturing costs are $70 per unit

Variable marketing costs are $8 per unit

Fixed manufacturing costs are $780,000

Income per Unit for Division A (assuming parts purchased externally, not internally from division B)

Required:

1. Division A wants to buy 37,500 units from Division B at $75 per unit. Should Division B accept or reject the proposal to sell the 37,500 units?

(a). Calculate the net operating profit or loss to Division B and to the firm as a whole if the 37,500 units are sold to Division A.

(b.) Calculate the net benefit to the firm as a whole if Division A will accept a partial shipment from Division B.

2. What is the range of transfer prices over which the divisional managers might negotiate a final transfer price?

Cost Management: A Strategic Emphasis (8th Edition) Chapter 19, Problem 49

Transfer Pricing;

Decision Making Phoenix Inc., a cellular communication company, has multiple business units, organized as divisions. Each division’s management is compensated based on the division’s operating income.

Division A currently purchases cellular equipment from outside markets and uses it to produce communication systems.

Division B produces similar cellular equipment that it sells to outside customers—but not to division A at this time.

Division A’s manager approaches division B’s manager with a proposal to buy the equipment from division B.

If it produces the cellular equipment that division A desires, division B will incur variable manufacturing costs of $60 per unit.

Relevant Information about Division B
Sells 50,000 units of equipment to outside customers at $130 per unit
Operating capacity is currently 80%; the division can operate at 100%
Variable manufacturing costs are $70 per unit
Variable marketing costs are $8 per unit
Fixed manufacturing costs are $580,000

Income per Unit for Division A (assuming parts purchased externally, not internally from division B)
Sales revenue $320
Manufacturing costs:
Cellular equipment 80
Other materials 10
Fixed costs 40
Total manufacturing costs 130
Gross margin 190
Marketing costs:
Variable 35
Fixed 15
Total marketing costs 50
Operating income per unit $140

Required
1. Division A wants to buy 25,000 units from division B at $75 per unit.

Should division B accept or reject the proposal?

How would your answer differ if (a) division A requires all 25,000 units in the order to be shipped by the same supplier, or (b) division A would accept partial shipment from division B?

2. What is the range of transfer prices over which the divisional managers might negotiate a final transfer
price? Provide a rationale for the range you provide.

Phoenix Inc., a cellular communication company, has multiple business units, organized as divisions. Each division’s management is compensated based on the division’s operating income. Division A currently purchases cellular equipment from outside markets and uses it to produce communication systems. Division B produces similar cellular equipment that it sells to outside customers—but not to division A at this time. Division A’s manager approaches division B’s manager with a proposal to buy the equipment from division B. If it produces the cellular equipment that division A desires, division B will incur variable manufacturing costs of $60 per unit.

Relevant Information about Division B

Sells 95,000 units of equipment to outside customers at $130 per unit

Operating capacity is currently 80%; the division can operate at 100%

Variable manufacturing costs are $70 per unit

Variable marketing costs are $8 per unit

Fixed manufacturing costs are $940,000

Income per Unit for Division A (assuming parts purchased externally, not internally from division B)

Required:

1. Division A wants to buy 47,500 units from Division B at $75 per unit. Should Division B accept or reject the proposal to sell the 47,500 units? (a). Calculate the net operating profit or loss to Division B and to the firm as a whole if the 47,500 units are sold to Division A. (b.) Calculate the net benefit to the firm as a whole if Division A will accept a partial shipment from Division B.

2. What is the range of transfer prices over which the divisional managers might negotiate a final transfer price?

Consider a food truck selling only grilled chicken sandwich. They order chicken breast once every two days, which means this order is intended to satisfy next two days’ demand. Demand for a two?day period (# of sandwiches) is estimated by experience in the following table.

Demand (# of sandwiches) 40, 80, 100, 120, 160

Probability .20, .20, .20, .30, .10

Each sandwich consumes half a pound of chicken breast. The procurement cost for each pound of chicken breast is $5. Revenue from each sandwich is $8. All unused chicken breast can be sold to a local farm at the price of $1 per pound. Ignore all the other cost for making a sandwich in this question. Hint: Before doing the marginal analysis, consider converting all units to either # of sandwiches or # of pounds of chicken breast.

FT1. How many pounds of chicken breast should you order to maximize profit?

FT2. What’s the expected total profit for a two?day period?