Mini-Case 14-3: Custom Cars, Inc

question 170

Essay

Mini-Case 14-3: Custom Cars, Inc.
Al and Helen Wise have a love affair with cars. After collecting and restoring cars for a number of years, they decide to form their own "kit car" company. This type of company sells "kits" to people who want to build their own functioning replicas of famous or collectable cars. About 60 percent of their business is selling the kits, 10 percent is conducting classes and seminars on assembling the kits, and the remaining 30 percent is actually building the cars for the customers.
Their business has three distinct manufacturing issues. The production of the car kits, the assembly of the custom cars for owners who want them but do not have the time to do the work themselves, and the "assembling and selling" training seminars on how to put the cars together.
-Explain which manufacturing layout would be best for each of the three manufacturing issues the Wises face.

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Definitions:

Credit Card Sales

Transactions in which goods or services are purchased using a credit card, immediate revenue for the seller, albeit often with processing fees deducted by the credit card processor.

Credit Sales

Sales where payment is deferred to a later date, typically generating receivables for the selling entity.

Sales Returns

Goods returned by customers to the seller for a refund or credit, often due to defects or dissatisfaction.

Allowances

Amounts deducted from gross revenue or expenses, accounting for items like returns, damaged goods, or discounts.