Discuss and critically analyze if the need exists from your research to open an additional facility to produce knee replacements.
Critically evaluate the next steps the company should make with regards to expansion.
Should the company open the expansion?
Sections to include in your response:
Purpose Statement: A purpose statement helps tell your reader what to expect but it also keeps you on track. I compare the purpose statement to typing in the address on your GPS or writing down the address of your destination.
Executive Summary: One page written to the owners of JointsOrtho explaining your findings on opening the new warehouse
Written Components: Written document with critical analysis of the Risk/Return and Time Value of Money Three Project Risk types etc. Explain fixed and variable costs as they pertain to this type of business.
Financial Statements: At a minimum to include an Income Statement Cash Flow Statement and Balance Sheet. There will be several transactions provided that students will update within their Financial Statements however student teams may wish to expand upon their statements and include a summary of additional transactions etc. that they included.
Break Even Analysis: Will opening this plant Break Even within the first year?
Conclusions: Provide a critical analysis of the financial statements and written components of the paper.
References: Support all decisions with literature
You will be provided with some transactions for the purpose of getting you started with what to include but you are expected to come up with and support additional transactions. For instance you decide to hire an additional manager. You will need to put this information into the Financial Statement in the correct area.
Transactions: The following are a few transactions to get your group going on the Financial Statements. You may wish to include others. These are hypothetical as you are just trying to decide if the JointsOrtho Company should open a new facility. The numbers are based on a site the company is interested in buying and the information from when the first manufacturing plant opened.
Transaction 1: Borrow $6000000.00 for building with 10 year mortgage at 10% annum
Transaction 2: Pay your salary of $6000/month
Transaction 3: Pay for building: Set up what will be office space manufacturing space and warehouse space. Set a depreciation schedule
Transaction 4: Hire managers & Workers. Pay salaries and fringe benefits and taxes
Transaction 5: Pay employee health life and disability premiums plus FICA un-employment and withholding taxes
Transaction 6: Order $3000000 worth of machinery/equipment for manufacturing. Pay down.
Transaction 7: Receive machines and pay remaining amount due
Transaction 8: Hire employees- Expense 1st Months salary/wages set up machinery depreciation set-up standing costs
Transaction 9: Place order for raw materials at a cost of $1000000 which will include Machining Casting Grinding Polishing and metal injection molding materials. *Note: These raw materials will need to be ordered every 3 months.
Transaction 10: Receive 3 month supply of raw materials
Transaction 11: Start up production. Pay workers for the month
Transaction 12: Book depreciation and other manufacturing overhead costs for the month
Transaction 13: Finish manufacturing 2000 hips and move them into finished goods inventory
Transaction 14: Pay for the 3 month supply of raw materials received in Transaction 10
Transaction15: Manufacture and months supply of hip replacements
Transaction 16: Take an order for 1200 hip replacements
Transaction 17: Ship and invoice customer for 1200 hip replacements
Transaction 18: Receive payment for 1200 hip replacements