Discuss the critical success factors and whether or not you believe that GoPro shows
1. In the context of this course, you will be asked to address the issues/questions

below for GoPro, Inc. (GPRO). When addressing the issues/questions, be sure to

do so in the context of this course and GoPro. Your primary sources of

information will come from GoPro’s website, in particular “Investor Relations”

and the “GoPro 2014 Annual Report.” Also, look at the web pages for GoPro on

Yahoo! Finance and/or Morningstar.com.

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

GoPro shows evidence of success for these factors.

(4 pts) b) Discuss GoPro in the context of the Theory of Constraints.

(10 pts) c) From the material reviewed, explain whether or not GoPro shows

evidence in its operations/results of the perspectives of the balanced

scorecard.

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

GoPro.

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

(4 pts) f) Discuss (providing examples) the costs of controlling quality and the costs

of failing to control quality in the context of GoPro.

(5 pts) 2. Go to YouTube.com and search for the video, What is TOC – Eli Goldratt –

www.toc.co.uk It is a video of 4 minutes and 38 seconds. Please watch the video

and summarize the key points in terms of how the concepts presented can be used

in the decision making process for a manager.

(16 pts) 3. Given the following data:

Administrative costs $40,000

Building depreciation (80% for plant) 30,000

Property, plant and equipment 150,000

Indirect materials and supplies 4,000

Sales commissions 15,000

Accounts receivable 15,000

Direct materials inventory, Jan 1 14,000

Direct labor 35,000

Direct materials inventory, Dec 31 17,000

Finished goods inventory, Jan 1 7,000

Finished goods inventory, Dec 31 8,000

Materials purchases 27,000

Accounts payable 12,000

Work in process inventory, Dec 31 12,000

Supervisory and indirect labor 12,000

Property taxes (80% for plant) 10,000

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

Work in process inventory, Jan 1 8,000

Sales revenue 250,000

Required:

a) Determine the cost of goods manufactured, the gross profit, and the operating

income.

b) From the above list identify, what might be a product cost and what might be a

period cost.

c) Explain the terms, cost object and cost driver.

(6 pts) 4. Victoria Hair Salon styles hair in three operations – washing, cutting/setting, and

drying – and charges $15 per styling. (Each styling is one “unit.”) Victoria styles

hair on a walk-in basis and does not take appointments; customers who face a

wait walk across the street to another salon. Victoria’s owners find it has a

cutting/setting bottleneck on Saturdays due to a limited number of stylists. The

bottleneck exists for a total of eight hours each Saturday. Pertinent information

follows:

Washing Cutting/Setting Drying

Hourly Capacity 30 Units 12 Units 15 Units

Saturday Capacity (8 hours) 240 Units 96 Units 120 Units

Actual Saturday Production 96 Units 96 Units 96 Units

Fixed Operating Costs per Saturday $10 $75 $100

Each hair styling has variable costs of $5. Victoria’s output is constrained by the 96 units of

cutting/setting capacity. Two options exist that can relieve the bottleneck at the cutting/setting

operation. Consider the differential costs associated with each of the following operations to

determine the impact on throughput.

Option a. Victoria can increase bottleneck output by hiring one non-stylist employee to prepare

customers for the cutting/setting by washing and combing their hair. This would increase the

cutting/setting capacity to 115 each Saturday. The cost for this additional employee is $64 per

Saturday.

Option b. Victoria could hire another stylist for each Saturday increasing the cutting/setting

capacity to 108 each Saturday and costing an additional $120 per stylist.

Should Victoria’s owner go ahead with either of the two options? Why or why not?

(12 pts) 5. Jasper’s Flooring makes three types of flooring products: tile, carpet,

and parquet. Cost analysis reveals the following costs (expressed

on a per-square-yard basis) are expected for 2016

TILE CARPET PARQUET

Direct materials $5.20 $3.25 $8.80

Direct labor 1.80 .40 6.40

Variable overhead 1.00 .15 1.75

Variable selling expenses .50 .25 2.00

Variable administrative expenses .20 .10 .30

Fixed overhead $760,000

Fixed selling expenses 240,000

Fixed administrative expenses 200,000

Per-yard expected selling prices are: tile, $16.40, carpet, $8.00; and parquet $25.00.

In 2015 sales were as follows and the mix is expected to continue in 2016.

TILE CARPET PARQUET

Square yards 24,000 144,000 12,000

Review of recent tax returns reveals an expected tax rate of 40 percent.

Required:

a) How many square yards of each product are expected to be sold at the breakeven point?

b) Assume that the company desires an after-tax profit of $680,000. How many square

yards of each type of product would need to be sold to generate this profit level? How

much revenue would be required?

(12 pts) 6. Lakeland Inc. manufactures 1 GB flash drives (jump drives). Price and cost data

for a relevant range extending to 200,000 units per month are as follows:

Sales price per unit

(Current monthly sales volume is 130,000 units) $ 20.00

Variables cost per unit:

Direct materials 6.20

Direct labor 7.00

Variable manufacturing overhead 2.00

Variable selling and administrative expenses 1.80

Monthly fixed expenses:

Fixed manufacturing overhead $103,000

Fixed selling and administrative expenses 187,000

Lakeland’s tax rate is 40 percent.

Requirements:

a) What would the company’s operating income be if it sold 160,000 units?

b) What would the company’s monthly operating income be if it had sales of

$4,000,000?

c) What is the breakeven point in units? In sales dollars?

d) How many units would the company have to sell to earn a monthly net income

of $260,100?

(15 pts) 7. Platt Sports Products manufactures and distributes three types of golf clubs:

beginners, intermediate, and advanced. The materials used in these clubs

increases in each level and allows for more precise balancing and longer wear.

Production is highly automated for the beginners’ clubs, whereas the intermediate

and advanced clubs require a varying degree of labor, depending on the intricacy

of the balancing process. Platt applies all indirect costs according to a

predetermined rate based on direct labor hours. A consultant recently suggested

that Platt switch to an activity-based costing (ABC) system, and identified the

following cost breakdown for the upcoming year:

Estimated

Activity Recommended Cost Drivers Costs Cost Driver

Order processing Number of orders $52,500 125 orders

Production setup Number of production runs 210,000 75 runs

Materials handling Pounds of materials used 375,000 125,000 lbs

Machine depr. and

Maintenance Machine hours 322,000 20,000 hours

Quality control Number of inspections 80,000 40 inspections

Packing Number of units 14,000 280,000 units

In addition, management estimates 50,000 direct labor hours will be used in the

upcoming year at a rate of $14 per hour.

Assume that the following activity took place in the first month of the upcoming

year:

Beginners Intermediate Advanced

Number of units produced 20,000 8,000 3,000

Direct material costs $20,800 $13,000 $8,000

Direct labor hours 500 1,000 2,000

Number of orders 6 4 3

Number of production runs 2 2 3

Pounds of material 8,000 3,200 1,500

Machine hours 1,200 300 200

Number of inspections 3 3 2

Number of units shipped 18,000 7,500 2,500

Required:

a) Compute the production costs for one unit of each product in the first month

of the upcoming year using direct labor hours as the allocation base.

b) Compute the production costs for one unit of each product in the first month

of the upcoming year using activity based costing.

c) Comment on the results.

Discuss the critical success factors and whether or not you believe that GoPro shows
1. In the context of this course, you will be asked to address the issues/questions

below for GoPro, Inc. (GPRO). When addressing the issues/questions, be sure to

do so in the context of this course and GoPro. Your primary sources of

information will come from GoPro’s website, in particular “Investor Relations”

and the “GoPro 2014 Annual Report.” Also, look at the web pages for GoPro on

Yahoo! Finance and/or Morningstar.com.

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

GoPro shows evidence of success for these factors.

(4 pts) b) Discuss GoPro in the context of the Theory of Constraints.

(10 pts) c) From the material reviewed, explain whether or not GoPro shows

evidence in its operations/results of the perspectives of the balanced

scorecard.

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

GoPro.

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

(4 pts) f) Discuss (providing examples) the costs of controlling quality and the costs

of failing to control quality in the context of GoPro.

(5 pts) 2. Go to YouTube.com and search for the video, What is TOC – Eli Goldratt –

www.toc.co.uk It is a video of 4 minutes and 38 seconds. Please watch the video

and summarize the key points in terms of how the concepts presented can be used

in the decision making process for a manager.

(16 pts) 3. Given the following data:

Administrative costs $40,000

Building depreciation (80% for plant) 30,000

Property, plant and equipment 150,000

Indirect materials and supplies 4,000

Sales commissions 15,000

Accounts receivable 15,000

Direct materials inventory, Jan 1 14,000

Direct labor 35,000

Direct materials inventory, Dec 31 17,000

Finished goods inventory, Jan 1 7,000

Finished goods inventory, Dec 31 8,000

Materials purchases 27,000

Accounts payable 12,000

Work in process inventory, Dec 31 12,000

Supervisory and indirect labor 12,000

Property taxes (80% for plant) 10,000

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

Work in process inventory, Jan 1 8,000

Sales revenue 250,000

Required:

a) Determine the cost of goods manufactured, the gross profit, and the operating

income.

b) From the above list identify, what might be a product cost and what might be a

period cost.

c) Explain the terms, cost object and cost driver.

(6 pts) 4. Victoria Hair Salon styles hair in three operations – washing, cutting/setting, and

drying – and charges $15 per styling. (Each styling is one “unit.”) Victoria styles

hair on a walk-in basis and does not take appointments; customers who face a

wait walk across the street to another salon. Victoria’s owners find it has a

cutting/setting bottleneck on Saturdays due to a limited number of stylists. The

bottleneck exists for a total of eight hours each Saturday. Pertinent information

follows:

Washing Cutting/Setting Drying

Hourly Capacity 30 Units 12 Units 15 Units

Saturday Capacity (8 hours) 240 Units 96 Units 120 Units

Actual Saturday Production 96 Units 96 Units 96 Units

Fixed Operating Costs per Saturday $10 $75 $100

Each hair styling has variable costs of $5. Victoria’s output is constrained by the 96 units of

cutting/setting capacity. Two options exist that can relieve the bottleneck at the cutting/setting

operation. Consider the differential costs associated with each of the following operations to

determine the impact on throughput.

Option a. Victoria can increase bottleneck output by hiring one non-stylist employee to prepare

customers for the cutting/setting by washing and combing their hair. This would increase the

cutting/setting capacity to 115 each Saturday. The cost for this additional employee is $64 per

Saturday.

Option b. Victoria could hire another stylist for each Saturday increasing the cutting/setting

capacity to 108 each Saturday and costing an additional $120 per stylist.

Should Victoria’s owner go ahead with either of the two options? Why or why not?

(12 pts) 5. Jasper’s Flooring makes three types of flooring products: tile, carpet,

and parquet. Cost analysis reveals the following costs (expressed

on a per-square-yard basis) are expected for 2016

TILE CARPET PARQUET

Direct materials $5.20 $3.25 $8.80

Direct labor 1.80 .40 6.40

Variable overhead 1.00 .15 1.75

Variable selling expenses .50 .25 2.00

Variable administrative expenses .20 .10 .30

Fixed overhead $760,000

Fixed selling expenses 240,000

Fixed administrative expenses 200,000

Per-yard expected selling prices are: tile, $16.40, carpet, $8.00; and parquet $25.00.

In 2015 sales were as follows and the mix is expected to continue in 2016.

TILE CARPET PARQUET

Square yards 24,000 144,000 12,000

Review of recent tax returns reveals an expected tax rate of 40 percent.

Required:

a) How many square yards of each product are expected to be sold at the breakeven point?

b) Assume that the company desires an after-tax profit of $680,000. How many square

yards of each type of product would need to be sold to generate this profit level? How

much revenue would be required?

(12 pts) 6. Lakeland Inc. manufactures 1 GB flash drives (jump drives). Price and cost data

for a relevant range extending to 200,000 units per month are as follows:

Sales price per unit

(Current monthly sales volume is 130,000 units) $ 20.00

Variables cost per unit:

Direct materials 6.20

Direct labor 7.00

Variable manufacturing overhead 2.00

Variable selling and administrative expenses 1.80

Monthly fixed expenses:

Fixed manufacturing overhead $103,000

Fixed selling and administrative expenses 187,000

Lakeland’s tax rate is 40 percent.

Requirements:

a) What would the company’s operating income be if it sold 160,000 units?

b) What would the company’s monthly operating income be if it had sales of

$4,000,000?

c) What is the breakeven point in units? In sales dollars?

d) How many units would the company have to sell to earn a monthly net income

of $260,100?

(15 pts) 7. Platt Sports Products manufactures and distributes three types of golf clubs:

beginners, intermediate, and advanced. The materials used in these clubs

increases in each level and allows for more precise balancing and longer wear.

Production is highly automated for the beginners’ clubs, whereas the intermediate

and advanced clubs require a varying degree of labor, depending on the intricacy

of the balancing process. Platt applies all indirect costs according to a

predetermined rate based on direct labor hours. A consultant recently suggested

that Platt switch to an activity-based costing (ABC) system, and identified the

following cost breakdown for the upcoming year:

Estimated

Activity Recommended Cost Drivers Costs Cost Driver

Order processing Number of orders $52,500 125 orders

Production setup Number of production runs 210,000 75 runs

Materials handling Pounds of materials used 375,000 125,000 lbs

Machine depr. and

Maintenance Machine hours 322,000 20,000 hours

Quality control Number of inspections 80,000 40 inspections

Packing Number of units 14,000 280,000 units

In addition, management estimates 50,000 direct labor hours will be used in the

upcoming year at a rate of $14 per hour.

Assume that the following activity took place in the first month of the upcoming

year:

Beginners Intermediate Advanced

Number of units produced 20,000 8,000 3,000

Direct material costs $20,800 $13,000 $8,000

Direct labor hours 500 1,000 2,000

Number of orders 6 4 3

Number of production runs 2 2 3

Pounds of material 8,000 3,200 1,500

Machine hours 1,200 300 200

Number of inspections 3 3 2

Number of units shipped 18,000 7,500 2,500

Required:

a) Compute the production costs for one unit of each product in the first month

of the upcoming year using direct labor hours as the allocation base.

b) Compute the production costs for one unit of each product in the first month

of the upcoming year using activity based costing.

c) Comment on the results.