Booker Jones Analysis Essay

1.A. If the cost of lay were to be incorporated into the history banknote (balance ragtime), then the cost of position used (Income statement) can be reduced. From 1960-1961, Booker J nonpareils developmentd its barrels produced from 43,000 barrels to 63,000 barrels. That is 20,000 barrel increased in just one year. The cost per barrels is $31.50. (20,000 * 31.50= $630,000)We can reduce the cost per barrel expense from income statement of $630,000. (-407,000+630,000= 223,000) Therefore, pretax profit would have been $223,000 instead of net loss of $407,000.B. If the change were make retroactively as of June 1, 1959 thenEffect on the balance sheet at the end of 1960Number of barrel in inventory in 1960 is 172,000(172,000 barrels * $31.50 = 5,418,000)$5,418,000 is the increased inventory after incorporated the cost of barrels to inventory. ($5418000 + $4,506,000 = $9,924,000)$9,924,000 is the new ending inventory in 1960Deferring the Aging costs into the inventory balance would increase the Net Profit in 1960. This would then increase the well-kept Earnings account on the balance sheetEffect on the balance sheet at the end of 1961Number of barrels in inventory in 1961 is 192,000(192,000 barrels * $31.50 = $6,048,000)$6,048,000 is the increased in inventory after incorporating the cost of barrels to inventory ($6,048,000 + $5,030,000 = $11,078,000)$11,078,000 is the new ending inventory in 1960Deferring the Aging costs into the inventory balance would increase the Net Profit in 1960. This would then increase the Retained Earnings account on the balance sheetEffect on the income statement for 19602. We do not believe that Jones went from a profit in 1960 to a loss for1961 because they can capitalize the patented barrels as inventory instead of expense it. Because of the 4 years aging life, it makes sense to capitalize the barrels and expense it as the aging process reduced.7.1. The original Levis Store Channel has a higher return on invested capital, meaning it is a approximate investment in a long run.Column1WholesaleChannelEstimateOriginal LevisStore ChannelEstimateOperating Profit forward Tax46Tax at 40%1.62.4NOPAT2.43.6Fixed AssetFactory PP&E55Distributed PP&E12Total Fixed Asset67Non-Cash Working CapitalCurrent Asset812Current Liability11Cash00Total Non-Cash Working Capital711Invested Capital1318Return on Invested Capital18%20%2. Value Chain AnalysisProviding strategic direction corporate strategyProvide the perfect fit jean for nodesMarket segment for insatiate customersBroaden market segment by offering customized jeansGenerating customer demand sales, marketing and customer service Increase in profit24% ungratified customersProvide more styles, more colors, better fits4224 possible combination of measurement400 prototype pairs stock at Kiosk for customers to try onFulfilling customer demand supply chain, manufacturing, production Order is transmitted directly to Levis factory. Each pair of jeans is individually cut 3 days shipping sanction to customers (at $5 extra charge per pair) Pull based responsiveness to actual buying patterns, improve manufacturing, and delivery cycle Need to find ways to falsify the 8 months lag between ordering cotton fabric and selling the final pair of jeans. Providing support services Finance, HR, legal and compliance Need additive finance to pay for trained personal clerksNeed to take out loan to finance initial investment of the project In 4 retail store locations