Reference no: EM13330825

BANNER MANUFACTURING INC.

In your second interview with Mr. banner, you presented your well prepared financial analysis of the Banner Manufacturing Company along with a cash flow statement. Mr. Banner was indeed very impressed with your personality and knowledge and consequently offered you a position as a general manager for his company.

OPERATING DATA

Banner Company makes two products, X and Y. The manufacturing operations take place in two producing departments, cutting and assembly. The Company also has two service departments, general factory and maintenance. These service departments provide services to the cutting and assembly departments.

The general factory department handles all purchases and takes care of the administrating matters. The maintenance department performs all the maintenance works for the cutting and the assembly departments.

The Company uses material "A" for both products X and Y. Material "B" is used only for product Y.

Due to the standardization and simplification of production, unskilled workers have been used in the past year. The Company can assign worker to either producing departments with minor training.

The material and labor requirements for the products are presented in appendix C.

All sales of the Company are on credit. Approximately, half of the customers take advantage of the cash discount and pay with in the one month discount period.

PLANNING FOR SUCCESS

Having gathered the above information, you are very anxious to utilize your intelligence and knowledge to improve the operations of the Banner Company. You have realized that first you need to determine the behavior of the Company's various costs in order to improve planning, cost control, and decision making.

REQUIREMENTS

Determine the cost equations for factory overhead, advertising expense, salary & commissions, bad debt expense, sales discount, and purchasing expense by using a simple or multiple regression model and the data presented in appendices C &D.

Attachment:- CASE.xls