9694
In the context of this course, you will be asked to address the issues/questions below for Williams-Sonoma, Inc. (WSM), www.williams-sonomainc.com When addressing the issues/questions, be sure to do so in the context of this course and Williams-Sonoma. You have been appointed as the special assistant to the Chief Executive Officer, Laura Alber, who has asked you to address the following five situations:
(2 pts) a) A fellow MBA alum from Lynn University, who now works in Admission at Lynn University would like to give each MBA student a benefit, which is programmed into the Lynn University ID card. This benefit would allow the student to buy a stainless-steel essential pan for $125. Normally the pan sells for $160 and its full cost is $130. Discuss if this would be feasible, i.e. Williams-Sonoma is able to do this transaction without it being a donation.
(2 pts) b) Williams-Sonoma currently buys many of its items from a manufacturer in China. A representative from a company in Malaysia is offering to sell them for 15% less than cost from the manufacturer in China. Discuss the issues that you would consider in deciding whether to accept this offer.
(10 pts) c) Ms. Alber wishes to develop an incentive plan for the store managers.
Before the plan is implemented, she wishes you to make sure that budgeting
for the stores is done correctly. She has asked you to submit a document, which
discusses the key points that you have learned in MBA 640. Be as thorough as possible.
(2 pts) d) Williams-Sonoma has only used absorption costing. Ms. Alber has asked you
to explain the merits of using variable costing under certain circumstances.
(2pts) e) Ms. Alber has asked you to explain how target costing/pricing would be used
in Williams-Sonoma’s pricing policies.
(15 pts) 2. The following information is available for 2017 for Baxter Corporation:
Revenue (100,000 units) $725,000
Manufacturing costs:
Materials 42,000
Variable overhead cash costs 35,500
Fixed overhead cash costs 81,900
Depreciation 249,750
Marketing and administrative costs:
Marketing variable cash costs 105,600
Marketing depreciation 37,400
Administrative fixed cash 127,300
Administrative depreciation 18,800
Total costs $698,250
Operating income $26,750
All depreciation charges are fixed costs and are expected to remain the same for 2018. Sales volume is expected to increase by 18 percent, but prices are expected to fall by 5 percent. Material costs are expected to decrease by 8 percent. Variable manufacturing overhead cash costs are expected to decrease by 2 percent per unit. Fixed manufacturing overhead cash costs are expected to increase by 5 percent.
Variable marketing cash costs change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero.
Required:
- Prepare a budgeted income statement for 2018.
- Explain how Kaizen budgeting could be used by Baxter. No computations are necessary for this part.
Attachments:
MBA640X2Sp217….docx
