Management Account Question 6

Question 1: Text, Minicase: Lynn, page 23

1

1. An operation manager should forecast the future demands of:

1. Lawn moving machine price
2. How to cater to customer preferences
3. Potential competitors and pioneer’s advantage
4. Market capacity and demand

1. Lawn moving machine

Replaceable parts for machines

Pharmacy

Common tools

1. She must buy insurance for her employees and themselves to prevent injuries at work. She should prepare a replacement temporary worker. Employees may be late and early leaving due to emergency. Employers also have postponed or early arrangements.

1. What Lynn does is service industry. The quality of service is their core competency. So quality assurance is most important to Lynn's business.

1. Lynn must guarantee the usability and safety of the equipment. They must maintain and overhaul their equipment regularly. Lynn needs regular customer visits to ensure quality and retain long-term customers.

2

1. Invest more in employees and equipment than her. Trade-off between her wage and employee’s wage. Trade-off between company input and personal income.

1. Trade-off between employee benefits and company benefits. Trade-off between taking risks and staying steady

1. Trade-off between quality and quantity. Trade-off between tradition and modernity.

3

I think it should be rewarded. But rewards should be publicized or advertised. This can motivate other employees.

4

Membership policy. Use a membership system to ensure long-term customer stability and pre-large amount of financing. Attract more customers with the benefits of membership to reach the goal of marketing.

Question 2: Text, Problem 4, page 47

1. Labor productivity

Before purchase of new equipment:

Carts / hour = 80

Workers = 4

Average production per worker = 80/4 = 20 carts

After purchase of new equipment:

Average production per worker = 80/3 = 26.67 carts

1. Cost of production

Before purchase the equipment:

Labor cost / hour = $10

Machine cost / hour = $40

Total working hours = 8 hours

Total cost / 8 hours = 8*4*10+8*40= 320+320= $640

After purchase of new equipment:

Labor cost / hour = $10

Machine cost / hour = $40 + $10 = $50

Total cost = 8*3*10+8*50 = $640

1. Due to these two ways has a same cost, both of them are suitable.

Question 3: Text, Problem 10, page 47

Productivity in case 1

Total output = 300

Number of days = 5