The Walt Disney Company (DIS)

1. In the context of this course, you will be asked to address the issues/questions below for The Walt Disney Company (DIS).  When addressing the issues/questions, be sure to do so in the context of this course and Disney.  Your primary sources of information will come from the Disney website, in particular “Investor Relations” and the “2017 Annual Report.” Also, look at the web pages for Disney on Yahoo! Finance and/or Morningstar.com.

 

(8 pts)           a)           Discuss the critical success factors and whether or not you believe that

Disney shows evidence of success for these factors.

(3 pts)           b)            Discuss Disney in the context of the Theory of Constraints.

(8 pts)           c)            From the material reviewed, explain whether Disney shows

evidence in their operations/results of the perspectives of the balanced     scorecard.

(4 pts)            d)           Discuss which of the activities of the value chain are most important to

Disney.

(3 pts)            e)           Discuss the concept of customer delivered value in the context of Disney.

(4 pts)           f)           Discuss the cost of controlling quality and the cost of failing to control

quality in the context of Disney.

 

(6 pts) 2.         Please go to YouTube.com and find the video Traits of Innovators by Open Forum (7:31). After watching this video, discuss what you believe are the key traits that you believe that you would wish to emulate as you progress to the pinnacle of your career.

 

(8 pts) 3.         Crowder Manufacturing Company manufactures and sells ceiling fans.  Crowder incurred the following costs related to quality for the year:

 

Cost of warranty                                             $35,000

Cost of employee quality training                   $27,000

Cost incurred to rework fans                          $18,000

Spoilage cost (net)                                          $15,000

Cost of handling customer complaints           $11,000

Depreciation cost of test equipment               $  6,000

Cost of quality circles                                     $  5,000

Maintenance cost of test equipment               $  3,000

Cost of retesting reworked fans                     $  2,000

Cost of final testing of fans                            $  1,000

 

Required:

1. Prepare a list of the costs, which are related to controlling quality and determine the total dollar amount of these costs.
2. Prepare a list of the costs, which are related to failing to control quality and determine the total dollar amount of these costs.
3. Explain why you might want to incur higher costs for controlling quality.

 

 

 

 

(8 pts) 4.         Bryan Inc. produces a specialty top-quality juice machine.  The product, the JM50, requires four processes to be completed.  Specifically, these processes are exterior construction, pulp filter insertion, painting, and packaging.  Each function is performed at separate workstations with different completion ratios:

 

• Exterior construction can manufacture 100,000 juicer exteriors per day.
• Pulp filter insertion can install 25,000 filters every 6 hours.
• Painting can decorate 3,000 juicers every half hour.
• Packaging can package 5,000 juicers per hour.

 

Required:

 

1. Determine the maximum amount of JM 50 machines Bryan Inc. can sell per month (assume an average of 30 days per month and 8 hours per day)?
2. What function is the bottleneck?
3. If the contribution margin per juicer is $30.00, would it be worthwhile to spend $5,000,000 to increase the capacity of the bottleneck function by 200,000 units? Show computations.

 

 

 

 

(9 pts) 5.            Rose Corporation manufactures a single electronic product called Precisionmix.  This unit is a batch-density monitoring device attached to large industrial mixing machines used in flour, rubber, petroleum, and chemical manufacturing.  Precisionmix sells for $900 per unit.  The following variable costs are incurred to produce each Precisionmix device:

 

Direct labor                                         $180

Direct materials                                     240

Factory overhead                                  105

Total variable production costs             525

Marketing costs                                       75

Total variable costs                             $600

 

Rose’s income tax rate is 40%, and annual fixed costs are $4,000,000.

 

Required:

1. If Rose Corporation achieves a sales and production volume of 8,000 units, determine the net income (loss).
2. Determine the annual sales revenue to achieve an after tax net income of $540,000.

 

 

 

(10 pts) 6.  Aquatic Aquarium, Inc., manufactures and sells aquariums, water pumps, and air filters using a sales mix of 1:2:2.  The company’s fixed costs are $26,000.  Other information is as follows:

Selling Price                Variable Cost

per unit                        per unit

Aquariums                   $60                              $25

Water pumps               20                                12

Air filters                     10                                3

 

 

Required:

1. Determine the breakeven point in sales dollars for each product.
2. If a total of 6,000 units is sold in the proportion of the sales mix, determine the operating income.

 

 

(16 pts) 7.  Muffintop Company makes two types of snack cake, the poppy seed and the blueberry.  Basic production information follows:

Poppy seed                  Blueberry

Direct materials cost per unit                                      $0.75                           $0.85

Direct labor cost per unit                                            $0.25                           $0.25

Sales price per unit                                                      $2.50                           $2.50

Expected production per month                     140,000 units              190,000 units

 

Muffintop has monthly overhead of $135,000, which is divided into the following cost pools:

Setup costs                              $50,000

Quality control                            28,300

Maintenance                                37,800

Engineering                             18,900

Total                                        $135,000

 

The company has also compiled the following information about the chosen cost drivers:

Poppy seed      Blueberry                    Total

Number of setups required                 40                               60                     100

Number of inspections                              75                       350                     425

Number of machine hours                   1,500                       750         2,250

Number of Engineering hours                   65                         70                     135

 

Required:

1. Calculate Muffintop’s gross margin per unit for each product under the traditional costing system. The cost driver for the overhead in the traditional method is machine hours.
2. Calculate Muffintop’s gross margin per unit for each product under the activity based costing system.
3. Compare the gross margin of each product under the traditional system and ABC.
4. Explain the pros and cons of using activity based costing.

 

 

(12 pts) 6.        Given the following data for 2017:

 

Administrative costs                                                   $35,000

Current liabilities                                                          18,000

Building depreciation (80% for plant)                          25,000

Indirect materials and supplies                                       4,000

Sales commission expenses                                           12,000

Accounts receivable                                                     15,000

Direct materials inventory, Jan 1, 2017                        15,000

Direct labor                                                                   32,000

Direct materials inventory, Dec 31, 2017                     16,000

Finished goods inventory, Jan 1, 2017                           8,000

Finished goods inventory, Dec 31, 2017                        7,000

Materials purchases                                                       20,000

Work in process inventory, Dec 31, 2017                     10,000

Supervisory and indirect labor                                      12,000

Accounts payable                                                            9,000

Property taxes (80% for plant)                                      10,000

Utilities and power (90% for plant)                              30,000

Work in process inventory, Jan 1, 2017                        12,000

Sales revenue                                                              200,000

Stockholders’ equity                                                     75,000

 

Determine:

1. The cost of goods manufactured.
2. The operating income.
3. Give an example of:
4. Direct cost
5. Product cost
6. Period cost
7. Variable cost