Compute the margin for Alyeska Services Company?

Question 1. Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:


Sales	$	17,300,000
Net operating income	$	5,000,000
Average operating assets	$	35,300,000

Required:

1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.)

2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.)

3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)

Question 2. Data Span, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

	Month
	1		2		3		4
Throughput time (days)	?		?		?		?
Delivery cycle time (days)	?		?		?		?
Manufacturing cycle efficiency (MCE)	?		?		?		?
Percentage of on-time deliveries	85	%	80	%	77	%	74	%
Total sales (units)	2040		1953		1853		1783

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

	Average per Month (in days)
	1	2	3	4
Move time per unit	0.7		0.4		0.5	0.5
Process time per unit	2.5		2.4		2.3	2.2
Wait time per order before start of production	18.0		19.7		22.0	23.8
Queue time per unit	4.1		4.7		5.4	6.2
Inspection time per unit	0.4		0.5		0.5	0.4

Required:

1-a. Compute the throughput time for each month.

1-b. Compute the delivery cycle time for each month.

1-c. Compute the manufacturing cycle efficiency (MCE) for each month.

2. Evaluate the company’s performance over the last four months.

3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that using Lean Production the company can eliminate the queue time during production. Compute the new throughput time and MCE.

3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company can eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

Question 3.

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.”

Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below:


Sales	$	21,750,000
Variable expenses		13,731,600
Contribution margin		8,018,400
Fixed expenses		6,025,000
Net operating income	$	1,993,400
Divisional average operating assets	$	4,338,800

The company had an overall return on investment (ROI) of 18.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,126,350. The cost and revenue characteristics of the new product line per year would be: