Question

managerial

E1-16A Lean production cost-benefit analysis (Learning Objective 5) Mclntyre Industries manufactures iPhone case covers. Sarabeth Anderson, the CEO, is trying to decide whether to adopt a lean thinking model. She expects that adopting lean production would save $77,000 in warehousing expenses and $39,600 in spoilage costs. Adopting lean production will require several one-time up-front expenditures: $25,000 for an employee training program, $89,000 to streamline the plant's production process, and $7,000 to identify suppliers that will guarantee zero defects and on-time delivery Requirements 1. What are the total costs of adopting lean production? 2. What are the total benefits of adopting lean production? 3. Should the company adopt lean production? Why or why not?

Answer 1

Answer of E1-16A

Requirement 1. What are the total costs of adopting lean production? The total costs of adopting lean production are $121,000 ($25,000 + $89,000 + $7,000) = $121,000.

Requirement 2. What are the total benefits of adopting lean production? The total benefits of adopting lean production are $116,600 ($77,000 + $39,600) = $116,600.

Requirement 3. Should the company adopt lean production? Why or Why not? Mclntyre Industries should not adopt lean production because the expected benefits are not greater than the total costs.

Answer of E1-13A   

1. Reporter from the Wall Street Journal = Financial accounting information
2. Regional division managers= Managerial accounting information
3. Potential investors = Financial accounting information
4. Bookkeeping department = Financial accounting information
5. Manager of the Service Department = Managerial accounting information
6. Wall Street Analyst = Financial accounting information
7. Division Controller = Both financial and managerial accounting information
8. State tax agency auditor = Financial accounting information
9. External auditor (public accounting firm) = Financial accounting information
10. Loan officer at the company's bank = Financial accounting information
11. Board of directors = Both financial and managerial accounting information
12. Internal auditor = Both financial and managerial accounting information
13. SEC examiner = Financial accounting information
14. Current stockholders = Financial accounting information