Fineprint Company (Abridged)

In: Business and Management

Submitted By trotsky
Words 628
Pages 3
Fineprint Company (Abridged)
Q1a
Net income is calculated to determine whether to accept the special order from Abbie Jenkins. Looking at the normal operation, net income for selling 150,000 brochures is $3,000. Due to FinePrint operating capacity capped at 150,000 per month, FinePrint have to give out equivalent amount of business (25,000 brochures) to produce for Abbie Jenkins. FinePrint net income will drop 50% from $3,000 to $1,500 if John accept Abbie Jenkins offer.
Hence, FinePrint should turn down the offer.
Standard order
Selling price = $17.00 per 100 brochures $0.17 per brochure
Selling units = 150,000 Total Per Unit
Revenue $25,500.00 $0.17
Less : Variable expenses $10,500.00 $0.07
Contribution margin $15,000.00 $0.10
Less: fixed expenses $12,000.00
Net income $3,000.00 Special & standard order mix Special order - 25,000 brochures
Selling price $10.00 per 100 brochures $0.10 per brochure
Selling units 25,000
Variable expenses per unit $0.06 (Less $1 for per 100 brochures for SR) Total Per Unit
Revenue $2,500.00 $0.10
Less : Variable expenses $1,500.00 $0.06
Contribution margin $1,000.00 $0.04

Fineprint Company (Abridged)
Q1a con’t

Standard order - 125,000 brochures
Selling price = $17.00 per 100 brochures $0.17 per brochure
Selling units = 125,000 Total Per Unit
Revenue $21,250.00 $0.17
Less : Variable expenses $8,750.00 $0.07
Contribution margin $12,500.00 $0.10 Total contribution margin $13,500.00
Less: fixed expenses $12,000.00
Net income $1,500.00

Fineprint Company (Abridged)
Q1b
In this case, FinePrint should accept which would increase net income from $3,000 to $ 4,000.
Standard order
Selling price = $17.00 per…...

Similar Documents

Fineprint Company

...CASE ANALYSIS FinePrint Company is a printing company which specializes in color printing brochures. The company is located in Charlottesville, Virginia. Its main consumers are mainly from central Virginia, with some in southwestern Virginia and Chesapeake Bay area. The owner of FinePrint Company, John Johnson, is presented with an opportunity to expand his company's capacity. In order to do this he must consider whether to outsource some of his printing to another company in Charlottesville, Virginia named SmallPrint Shop. Currently, FinePrint is running "at around" full capacity of 150,000 brochures a month. Problem incurred is FinePrint does not give us the actual amount of full capacity. So we must assume FinePrint still has available space within its facility to produce more products. The owner, Mr. John Johnson runs the company himself. In addition, he hired one sales representative and one printing-press operator. He also hired temporary labor to help when assistance is needed. SmallPrint has offered FinePrint a monthly amount of 30,000 brochures at a cost of $8 per 100 brochures. SmallPrint had performed a high quality of work and their company is dependable. This capacity is available from SmallPrint because they had lost a major customer, after investing company resources into a small printing press they used specifically for that customer’s need. SmallPrint offers FinePrint a low cost in order to keep their press going. Mr. Johnson thinks it......

Words: 2086 - Pages: 9

Fineprint

...There are three distinct possibilities for Fine Print: 1. Accept the Jenkins job outsource work to Bradley. This option involves outsourcing other jobs to Bradley and doing the Jenkins work. 2. Reject Jenkins job. Here we would reject the Jenkins job outright. 3. Outsource work to Bradley. We would sub contract the Jenkins job to Bradley. To determine which option to pick we need to find out our total cost per unit. Volume/Total cost = 100/$15. John quotes $17/100 that suggests a $2/100 markup. Jenkins has a $10/100 bid but there are costs that would not be applicable if the Jenkins job is accepted. (-$1/100 of sales commission). Granted that the fixed costs remain fixed we need to examine the variable costs. Direct material = 6,000/150,000 = $4/100 Direct labor = 1,500/150,000 = $1/100 Manufacturing overhead = 1,500/150,000 = $1/100 Fixed costs attributable to the Jenkins job = 150,000/10,125 = $6.75/100. Total cost attributable to Jenkins job = 6 + 6.75 = 12.75/100. It appears without factoring in fixed cost (that would exist even without production) that his variable cost to produce is $6/100. Since Bradley’s rates are $8/100 it would make sense to outsource other work and do the Jenkins job. We could reject the Jenkins job on the basis of capacity. We could outsource the Jenkins job to Bradley. Bradley’s costs come in under the price of the Jenkins job (Cost of $8/100 vs. Revenue of $10/100)....

Words: 258 - Pages: 2

Arcor: Global Strategy and Local Turbulence (Abridged)

... | | | |Arcor: Global Strategy and Local Turbulence (Abridged) | |Pankaj Ghemawat, Michael Rukstad, Jennifer Illes | | | | | | | International Business Module Arcor is bouncing back, as one of the few Argentine companies that survived the devastating financial crisis that hit the country in late 2001. Going forward, Arcor has many new avenues for growth as well as options for potentially new strategic positioning around the globe. Now that the Argentine operations appear to have stabilized, Lous Pagani, Arcor’s president along with top management......

Words: 1504 - Pages: 7

Be Company

...income statements, balance sheets, and cash budgets based on sales increases of 500 units per month and 30-day advanced production for January through September. See attached income statements, balance sheets and cash budgets. When will the company need extra funds? How much will be needed? When can a short-term loan to cover the need be repaid? The company needs extra funds in April to keep from going into a negative bank balance by the end of April. If nothing changes the ending bank balance for April will be -$2500. A short term loan of $2500 will allow the company to continue operating through April. Unfortunately if nothing changes, they will need another short term loan of $25000 to operate through May, $37500 to operate through June, $40000 to operate through July, and $32500 to operate through August. If the business plan is not changed or customers made to pay within the net 30 terms, a short term loan cannot be repaid with the current sales and production schedule. 2. How is it possible that a company starts with $250,000 in capital and has profitable sales for a period of six months and still ends up with a zero bank balance? Why did Medieval Adventures need money in April? How could this need have been avoided? The company runs out of cash because the aggressive growth schedule cannot be sustained while the customers are allowed to pay invoiced 30 days late. Medieval Adventures needs money in April because the cost to produce the June inventory. Aaron......

Words: 1247 - Pages: 5

Company

...5/8/2014 Most important document in constitution of a company is Memorandum | Law Teacher Need help? ☎ 0115 966 7966 Enter your search terms... Search Home Services Prices Order Quality About Us Law Help Contact Us My Account You are here: Law Teacher » Company Law » Essays » Most Important Document In Constitution Of A Company Is Memorandum Of Association Company Law Essay Most important document in constitution of a company is Memorandum Search all our free law essays... These essays have been written by students for you to use to help you with your studies. If you need your own custom law essay then we can help.... Get a quote for your own law essay... 0 Translate this page Select Language ​ ▼ Order Your Law Essay Search Share & Download Like 0 Print Download Email Order your custom law essay today to help you achieve the grade you need. Tw eet 0 Order Now Introduction The most important document in the constitution of a company is the Memorandum of Association of the company. The Articles of Association is the second most important document that needs to be registered by any company for its incorporation, registration and subsequent operation. It is a public document laying down the rules for the internal management of the company and it does not have the force of ‘law’. The provisions of the article amount to public notice, known as constructive notice. This is the doctrine of constructive notice.......

Words: 2872 - Pages: 12

Company

...incorporation is the creation of two independent bodies; the company and its membership. The membership of a limited company takes shares in a company. The shares held represent a member’s interest in the company. The nature and extent of this interest will determine the member’s right to participate in dividend payments as well as a member’s right to participate in the decision making policy of the company. Subject to any prohibition contained in the company’s constitution, a shareholder may freely sell or dispose of his shareholding interest. In respect of the company’s existence, it is quite irrelevant that the identity of its shareholder may change. A company’s legal existence is not dependent upon the survival of individual shareholders. Accordingly, a company is said to have perpetual succession. Although one person may in effect control and execute the affairs of a company by occupying several positions in the corporate structure – for example, an individual may be the majority shareholder, the company’s managing director and at the same time the company’s sole employee – such a person is not regarded as the company. The company has a separate legal entity. While a company holds its property and assets for the ultimate benefit of the associated tights of its membership, a member of a company may still be convicted A company’s board of directors is comprised of the individually appointed directors of the company. The board is the ultimate decision-making body and......

Words: 313 - Pages: 2

Romeo Engine Plant (Abridged)

...CASE: ROMEO ENGINE PLANT (ABRIDGED) 1. What were the main objectives of the Romeo Engine Plant’s manufacturing strategy? According to the Mission and Operating Philosophy of the Romeo Engine Plant (REP) Manufacturing Handbook of August 1989, “The Purpose of the Romeo Engine Plant is to produce the highest quality production engines in the world that meet all of our customers' requirements at a cost lower than the competition, and to develop teams of employees who are the best engine builders in the world.” Ford seemed to continue to use REP with the same objectives; only to market their brand instead of REP’s. During 1992, REP produced 400,000 engines in two engine models: a 4.6 liter, 2 valve engine used in the Lincoln Town Car, Ford Crown Victoria, and Mercury Grand Marquis, and a 4.6 liter, 4 valve engine used in Ford Motor Company's Lincoln Mark VIII luxury car. Sales of these automobiles for Ford were strong and Ford Motor Company would continually introduce new car models that would use the Romeo engines; so REP was to be Ford’s captive supplier. By 1996 REP expected to produce more than 800,000 engines per year. 2. What specific initiatives did the management of Romeo implement to achieve these objectives? REP was continuously striving towards better efficiency and high productivity. In this regard they were set target of increasing production from 400,000 engines per year in 1992 to reach at least 800,000 engines by 1996. This goal of increasing production......

Words: 1458 - Pages: 6

Hbs Case Study Fineprint

...1. FinePrint currently is operating at around full capacity: 150,000 brochures. Should Johnson accept the special order? See Answer Below Regular Ops Difference Special Order 25,000 Option 1 Option 2 Option 1 Option 2 Revenues $25,500 $23,750 -$1,750 $4,250 $2,500 Variable Cost Direct Material 6,000 6,000 1,000 1,000 Direct Labor 1,500 1,500 250 250 Manufacturing Overhead 1,500 1,500 250 250 Marketing 1,500 1,250 250 250 0 Total VC 10,500 10,250 250 1,750 1,000 Contribution Margin 15,000 13,500 -1,500 2,500 1,000 Fixed Costs Direct labor 3,000 3,000 Manufacturing Overhead 3,375 3,375 Marketing 1,875 1,875 Corporate 3,750 3,750 Total FC 12,000 12,000 -1500 No, the special order should not be accepted. It is clear that the special order would negatively impact revenue by $1500. 2. Assuming FinePrint is operating at capacity of 150,000 brochures and there is no special order from Abbie, should FinePrint outsource 30,000 brochures to Ernest? Why or why not? Regular Ops Difference Outsourcing 30,000 Option 1 Option 2 Option 1 Option 2 ...

Words: 536 - Pages: 3

Fineprint Company Case Solution

...FinePrint Company Case Analysis by Da Zhang Questions: 1. If FinePrint is currently operating at full capacity of 150,000 brochures per month, should the special order from Abbie Jenkins be accepted? [In answering, assume Ernest Bradley has not yet made his offer to handle 30,000 brochures.] John should not take this special order because filling any special order at full capacity at reduced price will fail to satisfy customers who pay full price. Computation of using 25,000 capacity to produce normal brochures: Revenue-Cost=1500*17-22500=25500-22500=3000 Computation of using 25,000 capacity to produce special order: Revenue-Cost=(1250*17+250*10)-(22500-250)=(21250+2500)-22250=1500 Apparently, the profit generated from special order is much less than from normal brochures, thus Fineprint should not take the offer. 2. Assume that Ernest Bradley has made his offer to handle 30,000 brochures. a. Assuming FinePrint is operating at capacity of 150,000 brochures and there is no special order opportunity from Abbie Jenkins, should FinePrint outsource 30,000 brochures to Ernest? Why or why not? Fineprint should not outsource 30,000 brochures to Ernest because the cost that Fineprint produce 30,000 by itself is less than the cost of outsourcing when the revenues remain unchanged. Cost of outsourcing 30,000 brochures=300*8=2400 Cost of self-production of 30,000 brochures=30,000*0.04+(30,000*0.01)*3=1200+900=2100 Apparently, variable cost $2100 is less than......

Words: 352 - Pages: 2

Fineprint Case Study

...1. Assume FinePrint is currently operating at full capacity of 150,000 brochures per month, should the special order from Abbie Jenkins be accepted? [In answering, assume Ernest Bradley has not yet made his offer to handle 30,000 brochures and that FinePrint cannot increase capacity beyond 150,000 brochures per month.] FinePrint should not accept the special order from Abbie Jenkins. Since, John Johnson’s goal is to maximize profits, FinePrint would only accept the special order if it increased their profits. An analysis was conducted to identify the company’s current revenues, costs and profits in its current state, and also if the special order was accepted (See Exhibit A). At full capacity, FinePrint has revenues of $25,500, costs of $22,500 which equates to $3,000 in profit a month. By accepting the special order, the total costs are decreased by $250 because Johnson saves $1 on every 100 brochures in the special order (no sales commission). The revenues generated from the special order decrease total revenues from $25,500 to $23,750 because FinePrint will only receive $10 per 100 brochures. This means the profit from executing the special order decrease from $3,000 to $1,500. This reduction in $1,500 in profits alone would indicate that FinePrint should not accept the special order. More importantly than short-term profits, however, is the fact that this deal does not make good business sense for FinePrint. Since FinePrint is operating at full capacity, in......

Words: 1157 - Pages: 5

Mcd Edf Abridged 08

...entanglement in controversy over its packaging frustrated the company. From EDF's perspective, McDonald's leadership position, its problematic history of waste management, and the iconic value of waste management as an environmental issue made the company an attractive candidate for partnership. EDF saw significant opportunity for both environmental action and a major, high visibility, opportunity to test its innovative approach to environmental problem-solving through corporate partnerships. On the other hand, EDF's positioning as a mainstream environmental group made it an attractive ally. McDonald's earlier attempts to talk with the more radical Citizens Clearinghouse for Hazardous Waste (CCHW), one of the ecology groups organizing grassroots actions against the company, had failed (Gifford, 1991). Below I briefly summarize the background histories of McDonald's and EDF before turning to a description of the partnership. McDonald's Environmental Record With environmentalism on the rise among the general public in the 1980s, consumer-driven businesses were particularly subject to and sensitive about public pressure (Livesey, 1993a, pp. 2-4). Plastic had been demonized by several environmentalist organizations including the grassroots groups Greenpeace and CCHW. The use-and-dispose philosophy at the core of McDonald's business and its distinctive plastic clamshell sandwich boxes, which helped to make the company one of the largest single users of polystyrene in the United......

Words: 11234 - Pages: 45

Fineprint Analyses

...Zack Aldridge Cost Accounting May 2015 FinePrint Company In this scenario, you have John Johnson. Johnson is the owner of a well-known high quality printing company in Central Virginia. Johnson performs most of his business around the central Virginia area but will occasionally expand outside of that area to do some business. John Johnson has recently been faced with two offers. The first offer was one made by a friend of his, who owns a small printing company, which is also in Virginia. She had called Johnson to see if he could do a special printing job for her. The second offer he had was from another small time printing business owner who offered to Johnson to help work for FinePrint for pretty cheap. Johnson’s friend, Abbie Jenkins, wanted to work a deal with Johnson where she would pay him 10 dollars for every 100 brochures he printed for her. From the moment he got that offer, he knew that was pretty low but told Abbie he would consider. In the second offer, Ernst had offered to help Johnson out by printing brochures for a low price. The offer of 8 dollars for every 100 brochures didn’t sound too bad to Johnson. After a first glance at both if the offers, it would seem to me that the second offer would be the best option. Even Johnson initially even thought that sounded like a more attractive option. After the calculations, it is figured to be that accepting the first offer on the special order would be the more attractive option. The net......

Words: 349 - Pages: 2

Abridged

...Dynatronics (abridged) Reading: Higgins, Chapter 7 1. As Ms Kraft, what is your recommendation for the introduction of the new product line? a. Use the weighted average cost of capital (11.7%) to value the project b. Assume the net working capital required for a year must be in place at the start of the year. Thus, for the first full year of operations, 1990, the net working capital needed to support that year’s business ($1300, Exhibit #3) must be acquired at 1/1/90. 15 c. Assume start-up marketing expenses (footnote c, Exhibit #3) and start-up capital expenditures are incurred at the beginning of 1990. 2. What is the Internal Rate of Return of the new product line and how does it compare to the cost of capital? 3. How does your answer to question #1 change if the net working capital for the year is put in place at the end of the year? Thus, for the first year of operations, 1990, the net working capital ($1300, Exhibit #3) is acquired at 12/31/90. What happens if the company decides the discount rate should be 16%, rather 11.7%? 4. Should R&D expenses (=10.3% of revenues) be allocated to the project? If your answer is “no”, whose P&L statement ultimately absorbs these costs? If your answer is “yes”, would you recommend not doing the project if the R&D allocation caused the Net Present Value of the project to switch from positive to negative? 5. Is the forecast shown in Exhibit #3 consistent with the historical performance of similar products developed by the......

Words: 301 - Pages: 2

Company

... Riordan Manufacturing Company is expanding the infrastructure by reducing the cost of their raw materials and entire finished products. The company has an old MRP Information System (IS) and this project we will provide an opportunity to upgrade the infrastructure that will be cost efficient in the way they track their inventory. Goal of the Project: The company would like to develop a new MRP to track and manage their raw material and finished products. This will reduce their cost throughout all companies and their plants. Business Objectives: * Accurately track and manage raw and finished products * Reduce inventory cost of raw and finished products * Improve MRP infrastructure The company would like to make sure that is feasible in developing a new MRP II System to ensure the company can track and manage their products and reduce the cost of materials. We will upgrade the company communication infrastructure. Limitation: * Financial – The project should not to exceed $750.000 * Time – Both systems need to be running at the same time until all the kinks are out of the system, so we will have 12 months to get it online. * Resources – The Company will bring in a third party technical analysis team to provide the expertise needed for the project. * Policies - They will provide new polices on the new system. Information Technology Requirement: The company will use a third party group to make sure...

Words: 557 - Pages: 3

Economy Shipping Company (Abridged)

...------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ECONOMY SHIPPING COMPANY ------------------------------------------------- (Abridged) ------------------------------------------------- In the spring of 1950 the controller of Economy Shipping Company, located near Pittsburgh, was preparing a report for the executive committee regarding the feasibility of repairing one of the company’s steam riverboats or of replacing the steamboat with a new diesel-powered boat. Economy Shipping was engaged mainly in the transportation of coal from the nearby mines to the steel mills, public utilities, and other industries in the Pittsburgh area. The company’s several steamboats also on occasion carried cargoes to places as far away as New Orleans. All the boats owned by Economy Shipping were steam-powered. All were at least 10 years old, and the majority were between 15 and 30 years old. The steamboat the controller was concerned about, the Conway, was 23 years old and required immediate rehabilitation or replacement. It was estimated that the Conway had a useful life of another 20 years provided that adequate repairs and maintenance were made. The book value of the Conway was $39,500, but the controller believed that if the company sold the boat in 1950, it would bring only around $25,000. The immediate rehabilitation costs for the Conway were estimated to be $115,000. The......

Words: 943 - Pages: 4

Handwerk | Big Sky (2015) | CRYSTAL ICR 3.0