You have been asked to assist the management of Ironwood Corporation in arriving at certain decisions. Ironwood has its home office in Michigan and leases factory buildings in Wisconsin, Minnesota, and North Dakota, all of which produce the same product. Ironwood's management provided you with a projection of operations for next year, as follows.

The sales price per unit is $5.

Due to the marginal results of operations of the factory in North Dakota, Ironwood has decided to cease its operations and sell that factory's machinery and equipment by the end of this year. Ironwood expects that the proceeds from the sale of these assets would equal all termination costs. Ironwood, however, would like to continue serving most of its customers in that area if it is economically feasible and is considering one of the following three alternatives:

• Expand the operations of the Minnesota factory by using space presently idle. This move would result in the following changes in that factory's operations.

Under this proposal, variable costs would be $2 per unit sold.

• Enter into a long-term contract with a competitor that will serve that area's customers. This competitor would pay Ironwood a royalty of $0.9 per unit based on an estimate of 26,000 units being sold.

• Close the North Dakota factory and not expand the operations of the Minnesota factory.

Total home office costs of $100,000 will remain the same under each situation.

Required:

To assist the management of Ironwood Corporation, complete the following schedule computing Ironwood's estimated operating profit from each of the following options:

a. Expansion of the Minnesota factory.

b. Negotiation of the long-term contract on a royalty basis.

c. Shutdown of the North Dakota operations with no expansion at other locations.

a.

b.

c.

You have been asked to assist the management of Ironwood Corporation in arriving at certain decisions. Ironwood has its home office in Michigan and leases factory buildings in Wisconsin, Minnesota, and North Dakota, all of which produce the same product. Ironwood's management provided you with a projection of operations for next year, as follows. Total Wisconsin Minnesota North Dakota Sales revenue $ 874,000 $ 434,000 $ 274,000 $ 166,000 Fixed costs Factory 214,000 113,000 54,000 47,000 Administration 74,000 46,000 23,000 5,000 Variable costs 287,000 130,000 86,000 71,000 Allocated home office costs 100,000 46,000 33,000 21,000 Total $ 675,000 $ 335,000 $ 196,000 $ 144,000 Operating profit $ 199,000 $ 99,000 $ 78,000 $ 22,000 The sales price per unit is $5. Due to the marginal results of operations of the factory in North Dakota, Ironwood has decided to cease its operations and sell that factory's machinery and equipment by the end of this year. Ironwood expects that the proceeds from the sale of these assets would equal all termination costs. Ironwood, however, would like to continue serving most of its customers in that area if it is economically feasible and is considering one of the following three alternatives: • Expand the operations of the Minnesota factory by using space presently idle. This move would result in the following changes in that factory's operations. Increase over Minnesota factory's current operations Sales revenue 50 % Fixed costs Factory 18 Administration 9 Under this proposal, variable costs would be $2 per unit sold. • Enter into a long-term contract with a competitor that will serve that area's customers. This competitor would pay Ironwood a royalty of $0.9 per unit based on an estimate of 26,000 units being sold. • Close the North Dakota factory and not expand the operations of the Minnesota factory. Total home office costs of $100,000 will remain the same under each situation. Required: To assist the management of Ironwood Corporation, complete the following schedule computing Ironwood's estimated operating profit from each of the following options: a. Expansion of the Minnesota factory. b. Negotiation of the long-term contract on a royalty basis. c. Shutdown of the North Dakota operations with no expansion at other locations. a. Ironwood Corporation Computation of Estimated Profit from Operations after Expansion of Minnesota Factory Minnesota factory:  Sales  Fixed costs   Factory   Administration  Variable costs  Allocated home office costs   Total  Estimated operating profit Wisconsin factory—estimated operating profit Less home office costs previously allocated to North Dakota factorya Estimated operating profit b. Ironwood Corporation Computation of Estimated Profit from Operations after Negotiation of Royalty Contract Estimated operating profit:  Wisconsin factory.............................................................................  Minnesota factory.............................................................................  Estimated royalties to be received Less home office costs previously allocated to North Dakota factorya............................................................................................ Estimated operating profit................................................................... c. Ironwood Corporation Computation of Estimated Profit from Operations after Shutdown of North Dakota Factory Estimated operating profit:  Wisconsin factory............................................................................  Minnesota factory............................................................................ Less home office costs previously allocated to North Dakota factorya.......................................................................................... Estimated operating pr

Hana Ltd. is a producer and importer of freshly cut flowers based in the country side village of Tagus. It has made a name for from its gerberas, roses, carnations, and tulips, although the portfolio includes a

range of itself other products. Tulips and some special flowers are imported from the Netherlands. Products are sold at its premises to florists, in the trade market to wholesalers and retailers, and directly to a large retail chain. The market for fresh flowers is very competitive, with significant pressure over prices. There is

high seasonality in supply (e.g. spring and early summer) and demand (e.g. Valentine’s Day, Mother’s Day, Christmas). When there is a significant mismatch between those supply and demand, prices can fluctuate widely, from ‘rock bottom’ prices that do not cover production costs to ‘sky high’ prices that make very generous profit margins. In addition to price, the market values highly product freshness, reliability of supply, speed of delivery, and range products available (including color variations).

The company owns part of its productive land and part of it is on a long-term land lease. All production of flowers is carried out in a series of greenhouses that Hana built and fully owns. Flower production facilities (greenhouses) are fitted with temperature and humidity control equipment that automatically opens the greenhouses to air circulation when temperature is too high and heats it up when the temperature is too low. The company uses its own two tractors to plough the land and to haul

trailers. The trailers carry fertilizers, seedlings for planting, and occasionally pesticides to the greenhouses. The plants, seedlings, shrubs, and bulbs planted by Hana are mostly imported to ensure the highest quality, productivity, and diversity of color variations. The trailers also carry freshly cut flowers back from the greenhouses to the processing and packing facility (as well as the green waste that is sent to a local dump). After processing and packaging, products are kept in one of three refrigeration units to prolong the life of flowers.

1

Hana currently employs 70 full-time staff, which represents the double of its size just four years ago. The company’s manager and founder, Mr Ting Tong, is an entrepreneur with twenty years of work experience in the sector but no training in management. He is directly assisted by his wife, Mrs Ming Tong, who manages the sales office and inventories. Like her husband, she has no formal training in management, but she is extremely energetic and outstanding in dealing with customers, a true asset to the company. Hana has a dedicated team of three salespersons working in the office at its premises, one accountant, two distribution employees, one foreman and one forewoman. The remaining employees work in the production, processing, and packaging of flowers, making flower production a labor- intensive activity. During peak times of production, part-time employees are hired on a need basis and on-going staff is paid for overtime work. All of the company’s employees are paid a fixed salary, plus any extras from overtime work.

The main building where the company operates houses the all administrative staff, the sales office, a product display area, the processing and packaging facility, and the refrigeration units. Workers are moved to and from the company’s main building, as well as between greenhouses, using two fully owned mini-vans. The company also uses its own fleet of three trucks (with cooling) to distribute products to customers and to take production to the trade market.

The company’s growth has created difficulties to Mr Tong in ensuring the timely payments to employees and suppliers. He is also finding a bit overwhelming to have a feel for how the company is doing, now that the scale of operations has grown to an unprecedented level. At the moment, there is no formal planning in the company; only rough estimates of revenues and the main cost items are prepared by Mr T o n g in his paper notebook. The company’s accountant role has been that of dealing with financial accounting matters and ensuring the company meets its legal tax obligations.

Another issue that Hana currently faces is the management of sales of products in short supply. These products cannot be sold to the first customer that comes through the door, but rather they need to be meticulously managed so that the orders from regular customers can be at least partially satisfied. Mrs Tong noted that the salespersons, who have been informally assigned to specific customers, frequently lacked an appreciation for this issue in their eagerness to meet their assigned customer’s requirements. No doubt Hana wanted a proactive sales team, but the sales push needed to be directed to products in good supply, not for those that can “sell for themselves”.

Required:

Using the detail in the case, describe how your chosen method of calculating product cost will be beneficial within HanaLtd.and have relevance to management.

Karen Noonan opened Clean Sweep Inc. on February 1, 2019. During February, the following transactions were completed. Feb. 1 Issued 5,000 shares of Clean Sweep common stock for $13,000. Each share has a $1.50 par. 1 Borrowed $8,000 on a 2-year, 6% note payable. 1 Paid $9,020 to purchase used floor and window cleaning equipment from a company going out of business ($4,820 was for the floor equipment and $4,200 for the window equipment). 1 Paid $220 for February Internet and phone services. 3 Purchased cleaning supplies for $980 on account. 4 Hired 4 employees. Each will be paid $480 per 5-day work week (Monday-Friday). Employees will begin working Monday, February 9. 5 Obtained insurance coverage for $9,840 per year. Coverage runs from February 1, 2019, through January 31, 2020. Karen paid $2,460 cash for the first quarter of coverage. 5 Discussions with the insurance agent indicated that providing outside window cleaning services would cost too much to insure. Karen sold the window cleaning equipment for $3,950 cash. 16 Billed customers $3,900 for cleaning services performed through February 13, 2019. 17 Received $540 from a customer for 4 weeks of cleaning services to begin February 21, 2019. (By paying in advance, this customer received 10% off the normal weekly fee of $150.) 18 Paid $300 on amount owed on cleaning supplies. 20 Paid $3 per share to buy 300 shares of Clean Sweep common stock from a shareholder who disagreed with management goals. The shares will be held as treasury shares. 23 Billed customers $4,300 for cleaning services performed through February 20. 24 Paid cash for employees' wages for 2 weeks (February 9-13 and 16-20). 25 Collected $2,500 cash from customers billed on February 16. 27 Paid $220 for Internet and phone services for March. 28 Declared and paid a cash dividend of $0.20 per share. Instructions (a) Journalize the February transactions. (You do not need to include an explanation for each journal entry.) (b) Post to the ledger accounts (Use T-accounts.) (c) Prepare a trial balance at February 28, 2019. Totals $30,420 (d) Journalize the following adjustments. (Round all amounts to whole dollars.) 1.Services performed for customers through February 27, 2019, but unbilled and uncollected were $3,800. 2.Received notice that a customer who was billed $200 for services performed February 10 has filed for bankruptcy. Clean Sweep does not expect to collect any portion of this outstanding receivable. 3.Clean Sweep uses the allowance method to estimate bad debts. Clean Sweep estimates that 3% of its month-end receivables will not be collected. 4.Record 1 month of depreciation for the floor equipment. Use the straight-line method, an estimated life of 4 years, and $500 salvage value. 5.Record 1 month of insurance expense. 6.An inventory count shows $400 of supplies on hand at February 28. 7.One week of services were performed for the customer who paid in advance on February 17. 8.Accrue for wages owed through February 28, 2019. 9.Accrue for interest expense for 1 month. 10.Karen estimates a 20% income tax rate. (Hint: Prepare an income statement up to income before income taxes to help with the income tax calculation.) (e) Post adjusting entries to the T-accounts. (f) Prepare an adjusted trial balance. (g) Prepare a multiple-step income statement, a retained earnings statement, and a properly classified balance sheet as of February 28, 2019. Net income $3,117 Tot. assets $26,101 (h) Journalize closing entries.

Calculating the Inflation Rate

Using the simple percent change formula above and the annual CPIs in the table below, it becomes possible to calculate the inflation rate between any two years.

For example, the inflation rate from 1990 to 1991 was 4.2 percent:

CPI (1991) − CPI (1990) X100

            CPI(1990)

=   136.2 – 130.7 X 100

            130.7

= 5.5/130.7 × 100

= 0.420 × 100

= 4.2%

Use the annual CPI data in the Table below to complete the inflation rate calculations for each year in Table A.

Table A: Calculating Inflation Rates

1. If you earned $10 an hour in 1994, how much would you have to earn in 1995 for your wage to have the same purchasing power?

2. If you saved $100 in 2018, how much interest would you have to earn in order for the savings to have the same purchasing power in 2019?

Table: Annual Average CPI (1982–1984 to 2012)

*Average CPI for 1982, 1983, and 1984; base level = 100.

How Much Did Things Cost in the “Good Old Days”?

Have you ever heard your parents or grandparents say, “Back in my day, a loaf of bread only cost a nickel and a gallon of gas only cost a quarter”? How can it be that things were so much cheaper back then? Were they really cheaper? You will try to answer this question by comparing modern prices to historical prices and calculating the percent increase in prices. To do so, you will examine prices of two goods: movie tickets and a McDonald’s Big Mac®.

Calculating Percent Change in Price

Percent change in price is calculated by dividing the amount of change in price by the original price and multiplying the result by 100. If the price has increased, percent change will be positive, and if the price has decreased, the percent change will be negative. The formula for calculating percent change in price:

New price – Old price × 100       OR        Price (Year 2) – Price (Year 1) × 100

Old price                                               Price (Year 1)

Historic Prices

1. Which item had the largest percent increase in price?

2. Prices seem so low in 1967. Were people much better off then? What else would

you need to know to draw a conclusion?

Marketing in Action Case : Real Choices at JetBlue When low-cost carrier JetBlue Airways began operations in 1999, it promised customers cheap fares combined with exceptional service. JetBlue planes offer more leg room and all seats on JetBlue planes offer passengers 36-channel DIRECTV® service on seat-back screens. For seven years, JetBlue, with a few exceptions, kept its promise to passengers and shot to the top of customer satisfaction surveys J.D. Power and Associates conducted. On Valentine’s Day, 2007, however, the airline suffered the worst crisis in its history. Due to an unexpected New York ice storm, nine JetBlue planes full of passengers were stranded on the tarmac for over 6 hours—one plane and its 130 passengers sat on the tarmac for 10 hours. The planes left the gate and then found they couldn’t take off, but the airlines, feeling that the storm would let up by midmorning, did not allow the planes to return to the gate. In the end, the wheels of the planes were frozen in the slush, unable to move. In the next few days things got even worse for JetBlue as a snowball effect (pardon the pun) from the storm caused hundreds of flights to be cancelled—JetBlue’s flight attendants and pilots were not where they were needed, and the company’s communication system staff people were not trained to tell them what to do. At some airports, police had to be called in to help calm down the irate customers. While the airline was far less than satisfactory in its response to the Valentine’s Day ice storm, its response to the crisis was a model of excellent PR. Seeking to swiftly respond to the crisis and appease angry customers, CEO David Neeleman quickly apologized to customers and explained what went wrong. He said he felt “mortified” and “humiliated.” To get his message across, he appeared on CNN’s American Morning, Today, Fox and Friends, and Squawk Box early the next day. But JetBlue did more than just apologize to consumers. The airline offered passengers who were stranded on JetBlue planes for three hours or more a full refund plus a free round-trip ticket to any JetBlue destination. In all, the airline spent $30 million on vouchers for passengers of the 1,102 cancelled flights. In addition to its immediate response to the February cancellations, JetBlue cited its dedication to “bringing humanity back to air travel” and established a Customer Bill of Rights retroactive to February 14. The Bill of Rights outlines what JetBlue will provide to its customers in cases of flight cancellations, departure delays, overbookings (customers who are denied boarding will receive $1,000), and even when the DIRECTV® is noperable. But will these changes satisfy customers? Most customers reacted with caution, saying that they would be watching the airline to see if it lived up to its promises. Other stranded passengers were less positive, and some vowed never to fly JetBlue again. Will the Bill of Rights allow JetBlue to gain the level of customer loyalty it enjoyed before the crisis? While most customers of delayed flights may be satisfied, others may not. What about customers whose delays fall 10 minutes short of receiving a full-price trip voucher? And what will happen when another crisis occurs? JetBlue must continue to develop customer service and PR programs if it is to stay in the air for the long haul. You Make the Call 1. What is the decision facing JetBlue? 2. What factors are important in understanding this decision situation? 3. What are the alternatives? 4. What decision(s) do you recommend? 5. What are some ways to implement your recommendation?

Define listening. Explain the listening types (informational, critical, and empathic) and stages of listening. Discuss the key differences between hearing and listening. Be sure to provide an example of how hearing and listening impact interpersonal communication. Discuss at least two barriers to listening. Be sure to include how these barriers impact interpersonal communication. Identify three verbal cues and three nonverbal cues that demonstrate to others that you are listening .

Three large parallel insulating sheets have surface charge densities s1 = –30 pC/m2,

s2 = +20 pC/m2, and s3 = +20 pC/m2. Adjacent sheets are a distance of 0.300 m from each other. Calculate the net electric field (magnitude and direction) due to all three sheets at points P, R, S, and T located midway between adjacent pairs.