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Clark Paints: The production department

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Question;Course Project A;For Project A, you will;need to review the Course Project Instructions in Document Sharing. An Excel;template file can be also found in Doc Sharing. Use it to do your master;budget and supporting schedules. This project will help you learn and understand;what a master budget is and how it is prepared. When you have;completed Project A, upload it into the Dropbox. There will be a;discussion thread area in Weeks 4 and 5 that you can use to ask questions about;the project.;Grading Rubric for;Course Project (Part A);Category;Points;%;Description;Documentation;Formatting;10;10%;Project;worksheets will be done in Excel and will contain formulas to receive;maximum credit.;Organization;Cohesiveness;10;10%;Calculations should;be organized and correctly labeled.;Editing;10;10%;Quality work will be;free of any spelling, punctuation, or grammatical errors.;Content;70;70%;A quality project will;have all required work completed and will be correct.;Total;100;100%;A quality;project will meet or exceed all of the above requirements.;See Syllabus, Due Dates for Assignments & Exams, for due date information.;Course Project B;Clark Paints: The Production Department has been;investigating possible ways to trim total production costs. One possibility currently;being examined is to make the paint cans instead of purchasing them. The;equipment needed would cost $200,000, with a disposal value of $40,000, and it;would be able to produce 5,500,000 cans over the life of the machinery. The;Production Department estimates that approximately 1,100,000 cans would be;needed for each of the next five years.;The company would hire three new employees. These three individuals would be;full-time employees, working 2,000 hours per year and earning $12.00 per hour.;They would also receive the same benefits as other production employees, 18% of;wages, in addition to $2,500 of health benefits.;It is estimated that the raw materials will cost 25? per can and that other;variable costs would be 5? per can. Since there is currently unused space in;the factory, no additional fixed costs would be incurred if this proposal is;accepted.;It is expected that cans would cost 45? each if purchased from the current;supplier. The company's minimum rate of return (hurdle rate) has been;determined to be 12% for all new projects, and the current tax rate of 35% is;anticipated to remain unchanged. The pricing for a gallon of paint, as well as;the number of units sold, will not be affected by this decision. The;unit-of-production depreciation method would be used if the new equipment is;purchased.Required: 1. Based on the above information and using Excel, calculate the;following items for this proposed equipment purchase;Annual cash flows over the expected life of the;equipment,Payback period,Annual rate of return,Net present value, andInternal rate of return.2. Would you recommend;the acceptance of this proposal? Why or why not? Prepare a short, double-spaced;Word paper elaborating and supporting your answer.Note: A sample problem can be found in Doc Sharing;(Word document instructions and Excel document solution).;Grading Rubric for;Course Project (Part B);Category;Points;%;Description;Documentation;Formatting;6;10%;Project worksheets will;be done in Excel and will contain formulas to receive maximum credit. Work;will be appropriately cited.;Organization;Cohesiveness;6;10%;Calculations should;be organized and correctly labeled. Also, for the Part B paper, a quality;paper will include an introduction of the company and industry. In a quality;project, the conclusion will summarize the strengths and weaknesses and their;recommendations.;Editing;6;10%;Quality work will be;free of any spelling, punctuation, or grammatical errors. Sentences and;paragraphs (where appropriate) will be clear, concise, and factually;correct.;Content;42;70%;A quality project will;have all required work completed and will be correct.;Total;60;100%;A quality;project will meet or exceed all of the above requirements.;See Syllabus, Due Dates;for Assignments & Exams, for due date information.

 

Paper#51350 | Written in 18-Jul-2015

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