Turbo-Oven, Inc

question 93

Essay

Turbo-Oven, Inc. is considering a move to cellular manufacturing. Management of the company has requested that you, as the management accountant for the organization, supply it with information that will help inform the decision as to whether such a move is desirable. Your research into past performance of the company as well as extensive discussion with the manager of operations and the sales manager produced the following information: Required:
1. In terms of the above information, provide for management of the company a rationale as to why you included each of the following items:
a. increase in total sales revenue
b. decrease in direct materials cost as a percentage of sales
c. decrease in holdings of Work-in-Process (WIP) inventory
2. Provide an estimate of each of the following financial effects associated with the proposed move to a cellular manufacturing layout (round all answers to nearest dollar):
a. change in total (out-of-pocket) manufacturing costs
b. reduction in WIP inventory holdings
c. net financial effect of the change, per year
3. In general, what types of costs would need to be incurred to reap the benefits outlined above in Requirement 2?

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Definitions:

External Locus

A belief system where an individual attributes their success or failure to external factors or forces beyond their control.

Internal Locus

Having the belief that one's own actions or behaviors are primarily responsible for their outcomes.

Blames Loss

A situation or outcome where an individual or group is held responsible for a loss or failure.

Sensing Scale

A term not commonly recognized in standard frameworks, suggesting a method or tool for measuring perception or awareness. NO.