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ACCT - Solution Modern Manufacturing Company (MMC)

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Question;Assignment 9: Cash Flow StatementThe manufacturing manager for Modern Manufacturing Company (MMC) is working on a justification for implementing a "Lean/Just-in-time" manufacturing system. No upfront investment will be needed. No revenue changes are forecasted. A team of employees will spend their time training employees and making process changes. The salaries and benefits of the "Just-in-time" staff are shown below for the three years of the project.A team of employees will spend their time training employees and making process changes. In year 0, $450,000 will be spent preparing the project team for this project. MMC uses straight-line depreciation in project justifications so this $450,000 should be allocated with 3-year straight line depreciation. The salaries and benefits of the "Just-in-time" staff are shown below for the three years of the project. There will not be any change in other S.G.& A. expenses besides depreciation and the JIT team.Financial gains are expected to be a reduction in the following areas: cost of good sold, inventory, and accounts payable. The data is shown below where each year changes from the previous year by the percentages shown. Note that changes are accumulative where the cost improvements in each year are carried forward into the following years.Determine the present worth of the project using a MARR of 15% to see if the project is justified. Submit your solution on a spreadsheet.Data BlockTime Span 3 YearsYear 0 1 2 3JIT Team costs $450,000 $300,000 $250,000 $200,000COGS-Reduction per year 7.5% annuallyCOGS at end of year 0 $3,000,000Inventory Reduction per year 10% annuallyInventory at end of year 0 $200,000Accounts Receivable reduction 0% annuallyAccounts Receivable at end of year 0 $150,000Accounts Payable reduction 10% annuallyAccounts payable at end of year 0 $100,000Tax Rate 25% annuallyInterest Expense annually $250,000 constant every yearMARR 15%

 

Paper#42221 | Written in 18-Jul-2015

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