Assignment:
You are the operations manager for a small kayak and canoe manufacturer (Valley Kayaks) located on the Pacific Northwest (Oregon). Lately your company has experienced product quality problems. Simply put, the kayaks that you produce occasionally have defects and require rework. Consequently, you have decided to assess the impact of introducing a total quality management (TQM) program. After discussing the potential effects with representatives from marketing, finance, accounting, and quality, you arrive at a set of estimates (contained in the following table). Top management has told you that they will accept any proposal that you come up with PROVIDED that it improves the return on assets measure by at least 25 percent.
| Category |
Current Values |
Estimated Impact of TQM |
| Sales |
$ |
2,691,000 |
|
|
9 |
% |
+ (improvement) |
| Cost of goods sold |
$ |
2,070,000 |
|
|
0 |
% |
|
| Variable expenses |
$ |
345,000 |
|
|
8.25 |
% |
- (reduction) |
| Fixed expenses |
$ |
134,550 |
|
|
0 |
% |
|
| Inventory |
$ |
519,000 |
|
|
30 |
% |
- |
| Accounts receivable |
$ |
282,000 |
|
|
0 |
% |
|
| Other current assets |
$ |
561,000 |
|
|
0 |
% |
|
| Fixed assets |
$ |
543,000 |
|
|
0 |
% |
|
|
a. Calculate ROA with changes and without changes? (Round your answers to 2 decimal places.)
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.