Chapter 9: Implementing Strategy Through Organizational Design

Organizational Design – The process through which managers select the combination of organizational structure and control systems that they believe will enable the company to create and sustain a competitive advantage. Coordinate and motivate employees To create valueand Obtain a competitive advantage Koontz and O’Donnell The Process School of Management Planning Organizing Staffing Directing Controlling Building blocks of organizational structure Differentiation Vertical – how much authority to delegate Horizontal – how to divide people Into functions and divisions Integration – coordinate people and functions To accomplish organizational goals and tasks Tall structure (7 – 10 levels) Flat structure (2 – 4 levels) Tall Structure Problems Coordination Information distortion Motivation Too many middle managers McKinsey Consulting Company Increased height of company organization structures Presidents Office President of each division Centralization or Decentralization (tending toward) Decentralization 1. Delegate decision making authority to middle and lower level managers 2. Adapt to local conditions. Promotes flexibility 3. Fewer managers needed Centralization 1. Facilitates coordination and planning 2. Decisions fit broad organizational objectives Management Policy – Guidelines for decision making are made at highest levels And passed down to lower levels Horizontal Differentiation – How to group tasks and activities to meet strategies Functional Structure – Grouping by expertise. Most U. S. firms have a functional structure Advantages Good place to learn Easy to control Effective and efficient Disadvantages Geographical diversion causes duplication of people and costs Communication problems Measurement problems Location problems Strategic problems Product Structure – Group by product line. Product Team structure Matrix Management Concurrent Design Methodology Cross-functional teams Geographic Structure Multidivisional Structure Self-contained product line or business unit (Operating responsibility) Corp headquarters staff. Financial Control. (Strategic Responsibility) Advantages of Multidivisional Structure Enhanced corporate financial control Strategic control Growth Internal efficiency Disadvantages of a Multidivisional Structure Establish Division-Corporate authority levels GM and Alfred Sloan Litton Industries Distortion of information Competition for resources Transfer pricing (GE example) Focus on short-term High operating costs All functions are in each division Integration and Organizational Control Forms in Integrating Mechanisms 1. Direct contact 2. Interdepartmental liaison roles 3. Temporary task forces – ad hoc committees 4. Permanent teams – standing committees 5. Integrating roles Differentiation and Integration The Nature of Organizational Control 1. Monitor 2. Evaluate 3. Compare actual to goals 4. Take corrective action Strategic Controls Financial controls Stock Sales Growth ROI Profit Output Controls Set Goals Measure output performance against goals Behavior Control – Rules and Procedures Common controls 1. Operating budgets 2. Standardization 3. Rules and procedures 4. Organizational Culture a. Values – beliefs and goals b. Norms – Expectations for behavior Culture and Strategic Leadership Walt Disney example

Balance Sheet and Inventory

Chapter 4 Discussion Questions |4-1. |What are the basic benefits and purposes of developing pro forma statements and a cash budget? | | | | | |The pro-forma financial statements and cash budget enable the firm to determine its future level of asset needs and the| | |associated financing that will be required. Furthermore, one can track actual events against the projections. Bankers | | |and other lenders also use these financial statements as a guide in credit decisions. | | | | |4-2. |Explain how the collections and purchases schedules are related to the borrowing needs of the corporation. | | | | | |The collections and purchase schedules measure the speed at which receivables are collected and purchases are paid. To | | |the extent collections do not cover purchasing costs and other financial requirements, the firm must look to borrowing | | |to cover the deficit. | | | | |4-3. |With inflation, what are the implications of using LIFO and FIFO inventory methods? How do they affect the cost of | | |goods sold? | | | | |LIFO inventory valuation assumes the latest purchased inventory becomes part of the cost of goods sold, while the FIFO | | |method assigns inventory items that were purchased first to the cost of goods sold. In an inflationary environment, the| | |LIFO method will result in a higher cost of goods sold figure and one that more accurately matches the sales dollars | | |recorded at urrent dollars. | | | | |4-4. |Explain the relationship between inventory turnover and purchasing needs. | | | | | |The more rapid the turnover of inventory, the greater the need for purchase and replacement. Rapidly turning inventory | | |makes for somewhat greater ease in foreseeing future requirement s and reduces the cost of carrying inventory. | | | |4-5. |Rapid corporate growth in sales and profits can cause financing problems. Elaborate on this statement. | | | | | |Rapid growth in sales and profits is often associated with rapid growth in asset commitment. A $100,000 increase in | | |sales may cause a $50,000 increase in assets, with perhaps only $10,000 of the new financing coming from profits. It | | |is very seldom that incremental profits from sales expansion can meet new financing needs. | | | |4-6. |Discuss the advantage and disadvantage of level production schedules in firms with cyclical sales. | | | | | |Level production in a cyclical industry has the advantage of allowing for the maintenance of a stable work force and | | |reducing inefficiencies caused by shutting down production during slow periods and accelerating work during crash | | |production periods. A major drawback is that a large stock of inventory may be accumulated during the slow sales | | |period. This inventory may be expensive to finance, with an associated danger of obsolescence. | | | | |4-7. |What conditions would help make a percent-of-sales forecast almost as accurate as pro forma financial statements and | | |cash budgets? | | | | | |The percent-of-sales forecast is only as good as the functional relationship of assets and liabilities to sales. To | | |the extent that past relationships accurately depict the future, the percent-of-sales method will give values that | | |reasonably represent the values derived through the pro-forma statements and the cash budget. | Chapter 4 Problems 1. Eli Lilly is very excited because sales for his nursery and plant company are expected to double from $600,000 to $1,200,000 next year. Eli notes that net assets (Assets — Liabilities) will remain at 50 percent of sales. His firm will enjoy an 8 percent return on total sales. He will start the year with $120,000 in the bank and is bragging about the Jaguar and luxury townhouse he will buy. Does his optimistic outlook for his cash position appear to be correct? Compute his likely cash balance or deficit for the end of the year. Start with beginning cash and subtract the asset buildup (equal to 50 percent of the sales increase) and add in profit. 1 Solution: Eli Lilly Beginning cash$120,000 – Asset buildup(300,000)(1/2 ? $600,000) Profit 96,000(8% ? $1,200,000) Ending cash($84,000)Deficit No, he will actually end up with a negative cash balance. 2. In problem 1 if there had been no increase in sales and all other facts were the same, what would Eli’s ending cash balance be? What lesson do the examples in problems 1 and 2 illustrate? 4-2. Solution: Eli Lilly (continued) Beginning cash$120,000 No asset buildup—– Profit 48,000(8% ? $600,000) Ending cash$168,000 The lesson to be learned is that increased sales can increase the financing requirements and reduce cash even for a profitable firm. 3. Gibson Manufacturing Corp. expects to sell the following number of units of steel cables at the prices indicated under three different scenarios in the economy. The probability of each outcome is indicated. What is the expected value of the total sales projection? OutcomeProbabilityUnitsPrice A0. 20100$20 B0. 5018025 C0. 3021030 4-3. Solution: Gibson Manufacturing Corporation |(1) |(2) |(3) |(4) |(5) |(6) | | | | | | |Expected | | | | | |Total |Value | Outcome |Probability |Units |Price |Value |(2 ? 5) | |A |. 20 |100 |$20 |2,000 |400 | |B |. 50 |180 |$25 |4,500 |2,250 | |C |. 0 |210 |$30 |6,300 |1,8900 | | | |Total expected value |$4,540 | 4. The Alliance Corp. expects to sell the following number of units of copper cables at the prices indicated, under three different scenarios in the economy. The probability of each outcome is indicated. What is the expected value of the total sales projection? OutcomeProbabilityUnitsPrice A0. 30200$15 B0. 5032030 C0. 2041040 4-4. Solution: Alliance Corporation |(1) |(2) |(3) |(4) |(5) |(6) | | | | | | |Expected | | | | | |Total |Value | |Outcome |Probability |Units |Price |Value |(2 ? ) | |A |. 30 |200 |$15 |$3,000 | 900 | |B |. 50 |320 |$30 |9,600 | 4,800 | |C |. 20 |410 |$40 |16,400 | 3,280 | | | |Total expected value |$8,980 | . ER Medical Supplies had sales of 2,000 units at $160 per unit last year. The marketing manager projects a 25 percent increase in unit volume this year with a 10 percent price increase. Returned merchandise will represent 5 percent of total sales. What is your net dollar sales projection for this year? 4-5. Solution: ER Medical Supplies | |Unit volume 2,000 ? 1. 25 |2,500 | | |Price $160 ? . 10 |$176 | | |Total Sales |$440,000 | | |Returns (6%) |22,000 | | |Net Sales |$418,000 | 6. Cyber Security Systems had sales of 3,000 units at $50 per unit last year. The marketing manager projects a 20 percent increase in unit volume sales this year with a 10 percent price increase. Returned merchandise will represent 6 percent of total sales. What is your net dollar sales projection for this year? 4-6. Solution: Cyber Security Systems |Unit volume 3,000 ? 1. 20 |3,600 | |Price $50 ? 1. 10 |? 55 | |Total Sales |$198,000 | |Returns (6%) |11,880 | |Net Sales |$186,120 | 7. Sales for Ross Pro’s Sports Equipment are expected to be 4,800 units for the coming month. The company likes to maintain 10 percent of unit sales for each month in ending inventory. Beginning inventory is 300 units. How many units should the firm produce for the coming month? 4-7. Solution: Ross Pro’s Sports Equipment |+ |Projected sales |4,800 |units | |+ |Desired ending inventory |480 |(10% ? ,800) | |– |Beginning inventory | 300 | | | |Units to be produced |4,980 | | | | | 8. Digitex, Inc. , had sales of 6,000 units in March. A 50 percent increase is expected in April. The company will maintain 5 percent of expected unit sales for April in ending inventory. Beginning inventory for April was 200 units. How many units should the company produce in April? 4-8. Solution: Digitex, Inc. |+ |Projected sales |9,000 |units (6,000 ? 1. 5) | |+ |Desired ending inventory |450 |units (5% ? ,000) | |– |Beginning inventory | 200 |units | | |Units to be produced |9,250 |units | 9. Hoover Electronics has beginning inventory of 22,000 units, will sell 60,000 units for the coming month, and desires to reduce ending inventory to 30 percent of beginning inventory. How many units should Hoover produce? 4-9. Solution: Hoover Electronics + |Projected sales |60,000 |units | |+ |Desired ending inventory |6,600 |(30% ? 22,000) | |– |Beginning inventory | 22,000 |units | | |Units to be produced |44,600 |units | 0. On December 31 of last year, Barton Air Filters had in inventory 600 units of its product, which costs $2 8 per unit to produce. During January, the company produced 1,200 units at a cost of $32 per unit. Assuming Barton Air Filters sold 1,500 units in January, what was the cost of goods sold (assume FIFO inventory accounting)? 4-10. Solution: Barton Air Filters |Cost of goods sold on 1,500 units | | | | | | | |Old inventory: | | | | Quantity (Units) |600 | | | Cost per unit |$ 28 | | | Total |$ 16,800 | | | | | | |New inventory: | | | | Quantity (Units) |900 | | | Cost per unit |$ 32 | | | Total |$28,800 | | |Total Cost of Goods Sold |$45,600 | 11. On December 31 of last year, Wolfson Corporation had in inventory 400 units of its product, which cost $21 per unit to produce. During January, the company produced 800 units at a cost of $24 per unit. Assuming that Wolfson Corporation sold 700 units in January, what was the cost of goods sold (assume FIFO inventory accounting)? 4-11. Solution: Wolfson Corporation |Cost of goods sold on 700 units | | | | |Old inventory: | | | Quantit y (Units) |400 | | Cost per unit |$ 21 | | Total |$ 8,400 | | | | |New inventory: | | | Quantity (Units) |300 | | Cost per unit |$ 24 | | Total |$ 7,200 | |Total Cost of Goods Sold |$15,600 | 12. At the end of January, Lemon Auto Parts had an inventory of 825 units, which cost $12 per unit to produce. During February the company produced 750 units at a cost of $16 per unit. If the firm sold 1,050 units in February, what was its cost of goods sold? a. Assume LIFO inventory accounting. b. Assume FIFO inventory accounting. 4-12. Solution: Lemon Auto Parts a. LIFO Accounting |Cost of goods sold on 1,050 units | | |New inventory: | | | Quantity (Units) |750 | | Cost per unit $ 16 | | Total |$12,000 | |Old inventory: | | | Quantity (Units) |300 | | Cost per unit |$ 12 | | Total |$ 3,600 | |Total Cost of Goods Sold |$15,600 | b. FIFO Accounting Cost of goods sold on 1,050 units | | |Old inventory: | | | Quantity (Units) |825 | | Cost per unit |$ 12 | | Total |$ 9,900 | |New inventory: | | | Quantity (Units) |225 | | Cost per unit |$ 16 | | Total |$ 3,600 | |Total Cost of Goods Sold |$15,600 | 13. Convex Mechanical Supplies produces a product with the following costs as of July 1, 2009: Material$ 6 Labor4 Overhead 2 $12 Beginning inventory at these costs on July 1 was 5,000 units. From July 1 to December 1, Convex produced 15,000 units. These units had a material cost of $10 per unit. The costs for labor and overhead were the same. Convex uses FIFO inventory accounting. Assuming that Convex sold 17,000 units during the last six months of the year at $20 each, what would gross profit be? What is the value of ending inventory? 4-13. Solution: Convex Mechanical Supplies |Sales (17,000 @ $20) | | |$340,000 | | |Cost of goods sold: | | | | | |Old inventory: | | | | | | Quantity (units) |5,000 | | | | | Cost per unit |$ 12 | | | | |Total | |$ 60,000 | | | |New inventory: | | | | | | Quantity (units) |12,000 | | | | | Cost per unit |$ 16 | | | | |Total | |$192,000 | | |Total cost of goods | | | | | |sold | | |$252,000 | | |Gross profit | | |$ 88,000 | | | | | | | | |Value of ending | | | | | |inventory: | | | | | |Beginning inventory | | | | | |(5,000 ( $ 12) | |$ 60,000 | | | |+ Total production | | | | | |(15,000 ( $16) | |$240,000 | | | |Total inventory | | | | | |available for sale | |$300,000 | | | |– Cost of good sold | |$252,000 | | | |Ending inventory | |$ 48,000 | | | |or | | | | | |3,000 units ( $16 = $48,000 | 14. Assume in problem 13 that Convex used LIFO accounting instead of FIFO. What would gross profit be? What is the value of ending inventory? 4-14. Solution: Convex Mechanical Supplies (Continued) |Sales (17,000 @ $20) | | |$340,000 | | |Cost of goods sold: | | | | | |New inventory: | | | | | | Quantity (units) |15,000 | | | | | Cost per unit †¦.. |$ 16 | | | | |Total †¦.. |$240,000 | | | |Old inventory: | | | | | | Quantity (units) †¦.. |2,000 | | | | | Cost per unit †¦.. |$ 12 | | | | |Total †¦.. | |$ 24,000 | | | |Total cost of goods | | | | | |sold †¦.. | | |$264,000 | | |Gross profit †¦.. | |$ 76,000 | | | | | | | | |Value of ending | | | | | |inventory: | | | | | |Be ginning inventory | | | | | |(5,000 ( $12) †¦Ã¢â‚¬ ¦ |$ 60,000 | | |+ |Total production | | | | | |(15,000 ( $16) †¦.. | |$240,000 | | | |Total inventory | | | | | |available for sale †¦.. | |$300,000 | | |– |Cost of good sold †¦.. | |$264,000 | | | |Ending inventory †¦.. |$ 36,000 | | | |OR | | | | | |3,000 units ( $12 = $36,000 | 15. Jerrico Wallboard Co. had a beginning inventory of 7,000 units on January 1, 2008. The costs associated with the inventory were: Material$9. 00 unit Labor5. 00 unit Overhead4. 10 unit During 2004, Jerrico produced 28,500 units with the following costs: Material$11. 50 unit Labor4. 80 unit Overhead5. 20 unit Sales for the year were 31,500 units at $29. 60 each. Jerrico uses LIFO accounting. What was the gross profit? What was the value of ending inventory? 4-15. Solution: Jerrico Wallboard Co. | |Sales (31,500 @ $29. 0) | | |$932,400 | | |Cost of goods sold: | | | | | |New inventory: | | | | | | Quantity (units) |28,500 | | | | | Cost per unit |$ 22. 50 | | | | |Total | |$641,250 | | | |Old inventory: | | | | | | Quantity (units) |3,000 | | | | | Cost per unit |$ 18. 0 | | | | |Total | |$ 54,300 | | | |Total cost of goods | | | | | |sold | | |$695,550 | | |Gross profit | | |$236,850 | | | | | | | | |Value of ending inventory: | | | | | |Beginning inventory | | | | | |(7,000 ( $18. 10) | |$126,700 | | | |+ Total production | |$641,250 | | | |(28,500 ( $22. 50) | | | | |Total inventory | | | | | |available for sale | |$767,950 | | | |– Cost of good sold | |$695,550 | | | |Ending inventory | |$ 72,400 | | | |OR | | | | | |4,000 units ( $18. 10 = $72,400 | 16. J. Lo’s Clothiers has forecast credit sales for the fourth quarter of the year as: September (actual)$70,000 Fourth Quarter October$60,000 November55,000 December80,000 Experience has shown that 30 percent of sales are collected in the month of sale, 60 percent in the following month, and 10 percent are never collected. Prepare a schedule of cash receipts for J. Lo’s Clothiers covering the fourth quarter (October through December). 4-16. Solution: J. Lo’s Clothiers | |September |October |November |December | |Credit sales |$70,000 |$60,000 |$55,000 $80,000 | |30% Collected in month of sales | | | | | | | |18,000 |16,500 |24,000 | |60% Collected in month after | | | | | |sales | |42,000 |36,000 |33,000 | |Total cash receipts | | | | | | | |$60,000 |$52,500 |$57,000 | 17. Victoria’s Apparel has forecast credit sales for the fourth quarter of the year as: September (actual)$50,000 Fourth Quarter October$40,000 November35,000 December60,000 Experience has shown that 20 percent of sales are collected in the month of sale, 70 percent in the following month, and 10 percent are never collected. Prepare a schedule of cash receipts for Victoria’s Apparel covering the fourth quarter (October through December). 4-17. Solution: Victoria’s Apparel | |September |October |November |December | |Credit sales |$50,000 |$40,000 |$35,000 $60,000 | |20% Collected in month of sales| | | | | | | |8,000 |7,000 |12,000 | |70% Collected in month after | | | | | |sales | |35,000 |28,000 |24,500 | |Total cash receipts | | | | | | | |$43,000 |$35,000 |$36,500 | 18. Pirate Video Company has made the following sales projections for the next six months. All sales are credit sales. March$24,000June$28,000 April30,000July35,000 May18,000August38,000 Sales in Janu ary and February were $27,000 and $26,000, respectively. Experience has shown that of total sales, 10 percent are uncollectible, 30 percent are collected in the month of sale, 40 percent are collected in the following month, and 20 percent are collected two months after sale. Prepare a monthly cash receipts schedule for the firm for March through August. Of the sales expected to be made during the six months from March through August, how much will still be uncollected at the end of August? How much of this is expected to be collected later? 4-18. Solution: Pirate Video Company Cash Receipts Schedule | |January |February |March |April | Forecasted unit sales |4,000 |10,000 |8,000 |6,000 | |+Desired ending inventory |15,000 |12,000 |9,000 | | |–Beginning inventory |6,000 |15,000 |12,000 | | |Units to be produced |13,000 |7,000 |5,000 | | |Cash Payments | | |Feb |March |April |May | |Units produced |8,000 |13,000 |7,000 |5,000 | |Materials ($7/unit) month after production | | | | | | | |$56,000 |$91,000 |$49,000 | |Labor ($3/unit) mon th of production | | | | | | | |39,000 |21,000 |15,000 | |Fixed overhead | |10,000 |10,000 |10,000 | |Dividends | | | |14,000 | |Total Cash Payments | |$105,000 |$122,000 |$88,000 | 21. Dina’s Lamp Company has forecast its sales in units as follows: |January |1,000 | |February |800 | |March |900 | |April |1,400 | |May |1,550 | |June |1,800 | |July |1,400 | Dina’s always keeps an ending inventory equal to 120 percent of the next month’s expected sales. The ending inventory for December (January’s beginning inventory) is 1,200 units, which is consistent with this policy. Materials cost $14 per unit and are paid for in the month after purchase. Labor cost is $7  per unit and is paid in the month the cost is incurred. Overhead costs are $8,000 per month. Interest of $10,000 is scheduled to be paid in March, and employee bonuses of $15,500 will be paid in June. Prepare a monthly production schedule and a monthly summary of cash payments for January through June. Dina produced 800 units in December. 4-21. Solution: Dina's Lamp Company Production Schedule | |Jan. |Feb. March |April |May |June |July | |Forecasted unit sales |1,000 | |900 |1,400 |1,550 |1,800 |1,400 | |+ Desired ending inventory |960 |1,080 |1,680 |1,860 |2,160 |1,680 | | |– Beginning inventory |1,200 | 960 |1,080 |1,680 | 1,860 | 2,160 | | |= Units to be produced |760 |920 |1,500 |1,580 |1,850 |1,320 | | |Summary of Cash Payments | | |Dec. |Jan. |Feb. |M arch |April |May |June | |Units roduced |800 |760 |920 |1,500 |1,580 |1,850 |1,320 | |Material cost ($14/unit) month after purchase | | | | | | | | | | |$11,200 |$10,640 |$12,880 |$21,000 |$22,120 |$25,900 | |Labor cost ($5/unit) month incurred | | | | | | | | | | |5,320 |6,440 |10,500 |11,060 |12,950 |$9,240 | |Overhead cost | |8,000 |8,000 |8,000 |8,000 |8,000 |8,000 | |Interest | | | |10,000 | | | | |Employee bonuses | | | | | | |15,500 | |Total Cash Payments | |$24,520 |$25,080 |$41,380 |$40,060 |$43,070 |$58,640 | 22. Graham Potato Company has projected sales of $6,000 in September, $10,000 in October, $16,000 in November, and $12,000 in December. Of the company’s sales, 20 percent are paid for by cash and 80 percent are sold on credit. Experience, shows that 40 percent of accounts receivable are paid in the month after the sale, while the remaining 60 percent are paid two months after. Determine collections for November and December. Also assume Graham’s cash payments for November and December are $13,000 and $6,000, respectively. The beginning cash balance in November is $5,000, which is the desired minimum balance. Prepare a cash budget with borrowing needed or repayments for November and December. (You will need to prepare a cash receipts schedule first. ) 4-22. Solution: Graham Potato Company Cash Receipts Schedule |September |October |November |December | |Sales |$6,000 |$10,000 |$16,000 |$12,000 | |Credit sales (80%) |4,800 |8,000 |12,800 |9,600 | |Cash sales (20%) |1,200 |2,000 |3,200 |2,400 | |Collections in month after| | | | | |sales (40%) | | |3,200 |5,120 | |Collections two months | | | | | |after sa les (60%) | | |2,880 |4,800 | |Total cash receipts | | | | | | | | |$9,280 |$12,320 | Graham Potato Company (Continued) Cash Budget | |November |December | |Cash receipts |$ 9,280 |$12,320 | |Cash payments |13,000 |6,000 | |Net Cash Flow |(3,720) |6,320 |Beginning Cash Balance |5,000 |5,000 | |Cumulative Cash Balance |1,280 |11,320 | |Monthly Loan or (Repayment) |3,720 |(3,720) | |Cumulative Loan Balance |3,720 |-0- | |Ending Cash Balance |$ 5,000 |$ 7,600 | 23. Juan’s Taco Company has restaurants in five college towns. Juan wants to expand into Austin and College Station and needs a bank loan to do this. Mr. Bryan, the banker, will finance construction if Juan can present an acceptable three-month financial plan for January through March. Following are actual and forecasted sales figures: Actual |Forecast |Additional | | | |Information | |November |$120,000 |January |$190,000 |April forecast |$230,000 | |December |140,000 |February | 210,000 | | | | | |March | 230,000 | | | Of Juan’s sales, 30 percent are for cash and the remaining 70 percent are on credit. Of  credit sales, 40 percent are paid in the month after sale and 60 percent are paid in the second month after the sale. Materials cost 20 percent of sales and are paid for in cash. Labor expense is 50 percent of sales and is also paid in the month of sales. Selling and administrative expense is 5 percent of sales and is also paid in the month of sales. Overhead expense is $12,000 in cash per month; depreciation expense is $25,000 per month. Taxes of $20,000 and dividends of $16,000 will be paid in March. Cash at the beginning of January is $70,000, and the minimum desired cash balance is $65,000. For January, February, and March, prepare a schedule of monthly cash receipts, monthly cash payments, and a complete monthly cash budget with borrowings and repayments. 4-23. Solution: Juan's Taco Company Cash Receipts Schedule |November |December |January |February |March |April | |Sales |$120,000 |$140,000 |$190,000 |$210,000 |$230,000 |$230,000 | |Credit sales (70%) |84,000 |98,000 |133,000 |147,000 |161,000 |161,000 | |Cash sales (30%) |36,000 |42,000 |57,000 |63,000 |69,000 |69,000 | |Collections (month after credit sales) | | | | | | | |40% | |33,600 |39,200 |53, 200 |58,800 |64,400 | |Collections (two months after credit | | | | | | | |sales) 60% | | |50,400 |58,800 |79,800 |88,200 | |Total Cash Receipts | | |$146,600 |$175,000 |$207,600 | | 4-23. (Continued) Juan’s Taco Company Cash Payments Schedule | |January |February |March | |Payments for Material Purchases (20% of current month’s sales) |$ 38,000 |$ 42,000 |$46,000 | |Labor Expense (50% of sales) |95,000 |105,000 |115,000 | |Selling and Admin. Exp. 5% of sales) |9,500 |10,500 |11,500 | |Overhead |12,000 |12,000 |12,000 | |Taxes | | |20,000 | |Dividends | | |16,000 | |Total Cash Payments* |$154,500 |$169,500 |$220,500 | *The $25,000 of depreciation is excluded because it is not a cash expense. 4-23. (Continued) Juan’s Taco Company Cash Budget | |January |February |March | |Total Cash Receipts $146,600 |$175,000 |$207,600 | |Total Cash Payments | 154,500 | 169,500 | 220,500 | |Net Cash Flow |(7,900) |5,500 |(12,900) | |Beginning Cash Balance |70,000 |65,000 |67,600 | |Cumulative Cash Balance |62,100 |70,500 |54,700 | |Monthly Loan or (repayment) |2,900 |(2,900) |10,300 | |Cumulative Loan Balance |2,900 |-0- |10,300 | |Ending Cash Balance |$ 65,000 |$ 67,600 |$ 65,000 | 24. Hickman Avionics’s actual sales and purchases for April and May are shown here along with forecasted sales and purchases for June through September. |Sales |Purchases | |April (actual) |$410,000 |$220,000 | |May (actual) |400,000 |210,000 | |June (forecast) |380,000 |200,000 | |July (forecast) |360,000 |250,000 | |August (forecast) |390,000 |300,000 | |September (forecast) |420,000 |220,000 | The company makes 10 percent of its sales for cash and 90 percent on credit. Of the credit sales, 20 percent are collected in the month after the sale and 80 percent are collected two months later. Hickman pays for 40 percent of its purchases in the month after purchase and 60 percent two months after. Labor expense equals 10 percent of the current month’s sales. Overhead expense equals $15,000 per month. Interest payments of $40,000 are due in June and September. A cash dividend of $20,000 is scheduled to be paid in June. Tax payments of $35,000 are due in June a nd September. There is a scheduled capital outlay of $300,000 in September. Hickman Avionics’s ending cash balance in May is $20,000. The minimum desired cash balance is $15,000. Prepare a schedule of monthly cash receipts, monthly cash payments, and a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,000. Excess cash (above $50,000) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $15,000). 4-24. Solution: Hickman Avionics Cash Receipts Schedule | |April |May |June |July |Aug. |Sept. |Sales |$410,000 |$400,000 |$380,000 |$360,000 |$390,000 |$420,000 | |Credit Sales (90%) |369,000 |360,000 |342,00 |324,000 |351,000 |378,000 | |Cash Sales (10%) |41,000 |40,000 |38,000 |36,000 |39,000 |42,000 | |Collections (month after sale) 20% | | | | | | | | |73,800 |72,000 |68,400 |64,800 |70,200 | |Collections (second month after sale) 80% | | | | | | | | | | | | | | | | | | |295,200 |288,000 |273,600 |259,2 00 | |Total Cash Receipts | | |$405,200 |$392,400 |$377,400 |$371,400 | 4-24. (Continued) Hickman Avionics Cash Payments Schedule | |April |May |June |July |Aug. |Sept. |Purchases |$220,000 |$210,000 |$200,000 |$250,000 |$300,000 |$220,000 | |Payments (month after purchase—40%) | | | | | | | | | |88,000 |84,000 |80,000 |100,000 |120,000 | |Payments (second month after purchase—60%) | | | | | | | | | | | | | | | | | | |132,000 |126,000 |120,000 |150,000 |Labor Expense | | | | | | | |(10% of sales) | | |38,000 |36,000 |39,000 |42,000 | |Overhead | | |15,000 |15,000 |15,000 |15,000 | |Interest Payments | | |40,000 | | |40,000 | |Cash Dividend | | |20,000 | | | | |Taxes | | |35,000 | | |35,000 | |Capital Outlay | | | | | |300,000 | |Total Cash Payments | | |$364,000 |$257,000 |$274,000 |$702,000 | 4-24. (Continued) Hickman Avionics Cash Budget | |June |July |August |September | |Cash Receipts |$405,200 |$392,400 |$377,400 |$371,400 | |Cash Payments |364,000 |257,000 274,0 00 |702,000 | |Net Cash Flow |41,200 |135,400 |103,400 |(330,600) | |Beginning Cash Balance |20,000 |50,000 |50,000 |50,000 | |Cumulative Cash Balance |61,200 |185,400 |153,400 |(280,600) | |Monthly Borrowing or (Repayment) |– |– |– |*80,600 | |Cumulative Loan Balance |– |– |– |80,600 | |Marketable Securities Purchased |11,200 |135,400 |103,400 |– | | (Sold) | |– |– |250,000 | |Cumulative Marketable Securities |11,200 |146,600 |250,000 |– | |Ending Cash Balance |50,000 |50,000 |50,000 |50,000 | *Cumulative Marketable Sec. (Aug)$250,000 Cumulative Cash Balance (Sept)–280,600 Required (ending) Cash Balance 50,000 Monthly Borrowing–$80,600 25. Carter Paint Company has plants in nine midwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. BALANCE SHEET (in $ millions) AssetsLiabilities and Stockholders’ Equity Cash$ 5Accounts payable$15 Accounts receivable15Accrued wages6 Inventory30Accrued taxes4 Current assets50 Current liabilities25 Fixed assets 40Notes payable30 Common stock15 Retained earnings 20 Total liabilities and Total assets$90 stockholders’ equity$90 Carter Paint has an aftertax profit margin of 5 percent and a dividend payout ratio of 30  percent. If sales grow by 10 percent next year, determine how many dollars of new funds are needed to finance the expansion. (Assume Carter Paint is already using assets at full capacity and that plant must be added. ) 4-25. Solution: Carter Paint Company [pic] [pic] [pic] [pic] [pic][pic] [pic] 26. Jordan Aluminum Supplies has the following financial statements, which are representative of the company’s historical average. Income Statement Sales$300,000 Expenses 247,000 Earnings before interest and taxes$ 53,000 Interest 3,000 Earnings before taxes$ 50,000 Taxes 20,000 Earnings after taxes$ 30,000 Dividends$ 18,000 Balance Sheet AssetsLiabilities and Stockholders’ Equity Cash $ 8,000Accounts payable$ 6,000 Accounts receivable20,000Accrued wages2,000 Inventory62,000Accrued taxes4,000 Current assets$ 90,000 Current liabilities$ 12,000 Fixed assets 100,000Notes payable10,000 Long-term debt20,000 Common stock80,000 Retained earnings68,000 Total liabilities and Total assets $190,000 stockholders’ equity$190,000 Jordan is expecting a 20 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing stores. Among liabilities, only current liabilities vary directly with sales. Using the percent-of-sales method, determine whether Jordan Aluminum has external financing needs. (Hint: A profit margin and payout ratio must be found from the income statement. ) 4-26. Solution: Jordan Aluminum Supplies [pic] Change in Sales = 20% ? $300,000 = $60,000 Spontaneous Assets = Current Asserts = Cash + Acc. Rec. + Inventory Spontaneous Liabilities = Acc. Payable + Accr. Wages + Accr. Taxes [pic] The firm needs $1,200 in external funds. 27. Cambridge Prep Shops, a national clothing chain, had sales of $200 million last year. The business has a steady net profit margin of 12 percent and a dividend payout ratio of 40 percent. The balance sheet for the end of last year is shown below. Balance Sheet End of Year (in $ millions) AssetsLiabilities and Stockholders’ Equity Cash$ 10Accounts payable$ 15 Accounts receivable15Accrued expenses5 Inventory50Other payables40 Plant and equipment 75Common stock30 Retained earnings 60 Total liabilities and Total assets$150 stockholders’ equity$150 Cambridge’s marketing staff tells the president that in this coming year there will be a large increase in the demand for tweed sport coats and various shoes. A sales increase of 15 percent is forecast for the Prep Shop. All balance sheet items are expected to maintain the same percent-of-sales relationships as last year*, except for common stock and retained earnings. No change is scheduled in the number of common stock shares outstanding, and retained earnings will change as dictated by the profits and dividend policy of the firm. (Remember the net profit margin is 12 percent. ) a. Will external financing be required for the Prep Shop during the coming year? b. What would be the need for external financing if the net profit margin went up to 14  percent and the dividend payout ratio was increased to 70 percent? Explain. * This included fixed assets are the firm is at full capacity. 4-27. Solution: Cambridge Prep Shops a. [pic] [pic] [pic] [pic] A negative figure for required new funds indicates that an excess of funds ($3. 06 mil. ) is available for new investment. No external funds are needed. b. [pic] [pic] The net profit margin increased slightly, from 12% to 14%, which decreases the need for external funding. The dividend payout ratio increased tremendously, however, from 40% to 70%, necessitating more external f

Homework Assignment Example | Topics and Well Written Essays - 750 words - 7

Homework - Assignment Example It is true that post-money valuation is always higher than pre-money valuation because of a few reasons worth noting. First, post-money valuation, thus, denotes the status of a company after it has receive some funding. Second, the post-money state is equally a mark of capital injection within the organization something that is absent in pre-money valuation. It is imperative to note valuation is a financial concept that is predominant in venture capital and private equity to determine the prospects of financing or investment. It is true that any form of investment has risk especially for the early stage ventures unlike the late stage venture capital. This is because of limited financing and resources in the market to attract customers. Another hindrance for early stage ventures includes the utilization of capital in other stabilizing instead of expanding the business. In other words, the various stages such as start-up and formative of early ventures prevent it from picking up as opposed to the late stage venture capital. After Initial Public Offering (IPO), it is true that shareholders could freely trade their shares. One of the reasons entails assessment of scarce commodity that often gives analysts a chance to advise shareholders on issues of their prospectus. Second, company prospects with strong brokers offers platform for trading in shares in public to earn dividends through smaller and quality brokerages (Bierman, 2011). Alternatively, reading of prospectus carefully is essential in the determination of IPO especially in the first investment to establish one’s high-net worth for dividends. There is advantage and disadvantage of being a public company. The advantage is that such a company is open to trading and investment prospects for most investors. It means that shareholders have a leverage to trade in shares, securities, and bonds with high prospects of value return. However, being a

Two Psychometric Tests Essay Example | Topics and Well Written Essays - 2750 words

Two Psychometric Tests - Essay Example CPP, the institute from where the test can be officially obtained, claims that it administers over 2 million assessments annually, which is the largest number for any psychometric assessment. The entire framework of MBTI rests on four major dichotomies (Berens, 2001, pp. 85-86). Attitude, the first dichotomy, divides people into Extroverts (E) or Introverts (I). The former prefer more interaction, action and spending time with people, whereas, the latter feel more comfortable while spending time alone, believe in being thought oriented, little but substantial interaction and depth in their limited social interactions (Bayne, 1997, pp. 89-90). The function of â€Å"perceiving† is the second dichotomy that divides into Sensing (S) or Intuition (N). Sensing refers to the approach where people look for concrete evidence, facts and empirical evidence. They prefer data coming from, or verifiable through, the five senses and favour measureable information. On the other hand, intuitive people make more effort to look for hidden meanings, patterns and contexts in the data presented to them. They would show more flexibility and trust of abstract and theoretical concepts, insights, subconscious feelings and others (Myers and Myers, 1980, pp. 55-56). The â€Å"judging† function is the third dichotomy, where a person would be classified as a Thinker (T) or Feeler (F). The judging function is concerned with how an individual is making decisions. Thinkers are more likely to make rational, logical and calculated decisions. They avoid developing an attachment with the variables and entities in order to achieve objectivity and make no comprise on the rules and regulations. Feelers, on the other hand, have the tendency to understand the situation from the inside, evaluate other perspectives, create relationships with the variables and then make a decision in order to create a harmony and balance (John, et al., 2008, p. 160). Lastly, the dichotomy of â€Å"lifestyle† classifies people into having a preference for Judging (J) function for Perceiving (P) function. The former people are more likely to live an organised and settled life. On the other hand, perceivers prefer keeping their decisions and options open (Myers and M yers, 1980, pp. 55-56). Development and Design The father of analytical psychology, Carl Jung, deserves the bulk of the credit for the creation of MBTI. Many of the concepts put forward by MBTI were a part of the Jung’s book Psychological Types published in the year 1921. However, the arrangement and approach was a bit different because Jung believed that everyone is either a â€Å"perceiver† or a â€Å"judger†. The rest of the other dimensions would flow from this division (John, et al., 2008, p. 160). MBTI, in its original form, was developed by a team of Katherine Briggs and Isabel Briggs Myers, the mother daughter team, divides people into sixteen different personality types. According to MBTI, there are four dichotomies, each one having two extremes and any people could be at or near any extreme thus allowing sixteen different personality types, based on different combinations (Bayne, 2004, pp. 99-100). MBTI first appeared in the year 1942 and since then it has been revised several times with different authors and most of these revisions have played an important

Corporate Branding and Public Relations Term Paper

Corporate Branding and Public Relations - Term Paper Example Corporate branding is characterized by a deliberate thrust on the part of the management of corporations to present to its public its most important and distinguishing attributes and to differentiate it among other corporations (Balmer, 2001 qt. In Kirby, 2003). It is a precursor to a more comprehensive corporate identity, which communicates these attributes beyond the mere public and also to the companies' stakeholders. The internal relations of the corporation bears heavily on the unity and consistency of the messages and images presented to the public, and this also has to bear on the way public relations is accomplished. The intention of those who manage corporate identities is to develop them along through strong internal relations that embody the unified intentions, meanings, and vocations of the entire corporation, and to present them in that form to the public and to its stakeholders. This approach to its formation includes the following areas of marketing defined by Balmer (2001). These are its identity, its personality, its service, and its image or reputation. The company's identity is said to embody all these, and public relations is seen as a vehicle that presents the whole to the public as its identity. Furthermore, there are several dimensions to the identity of a corporation: the actual, communicated, conceived, ideal and desired identities. The important players in establishing corporate identities have been identified as the management and the stakeholder groups, and the identity becomes the point of contact between these two players (Kirby, 2003, p. 11). The corporation's identity influences the direction of the public relations campaign. The strategy of the organization is often developed in order to garner the trust of the public. This strategy is a part of the organization's image, and once it is developed, the public relations campaign exploits as much of its attributes as possible in order to promote a particular aspect of the corporation's identity.     

Developing Marketing Communication Coursework Example | Topics and Well Written Essays - 2000 words

Developing Marketing Communication - Coursework Example The flagship concept of marketing involves the communication and product promotion for products considered top of the art used to drive sales in international markets (Samsung Mobile, 2014). Using marketing concepts and theories such as the theory of the firm, marketing mix, and retention marketing mix, this paper seeks to analyze SE’s use of GUC as a product promotion campaign. In addition, the applicability of the media and promotion tools is assessed and compared with theoretical best practice. For instance, using the theory of the firm, it is considered best practice for companies to mitigate their spending and increase returns such that product promotion is both beneficial to the company and directly influencing sales positively (Luo, & Donthu, 2006). The paper concludes with recommendations regarding areas in product promotion where Samsung should adapt different or improve on the current approach. For instance, international campaigns featuring products that do not make it to the international market burden promotional campaigns with extra costs. Samsung Electronics (SE), is a technology company that competes in the mainstream international smartphone industry. To address the threat of surging sales following the entry of alternative cheaper phones such as Xiaomi Note targeting the Chinese market, Samsung developed the GUC to familiarize customers with the ‘Next Big Thing’ (Extreme Tech, 2014). Samsung trades all its flagship smartphones with the tagline, ‘The Next Big Thing’ which serves the purpose of communicating to customers about the currently released premium products (Samsung Mobile, 2014). SE’s 2014-GUC makes use the DRIP (Different, Reinforce, Inform, and Persuade) Model aiming at: In SE, GUC targets the international middle-to-upper class customers (Extreme Tech, 2014). Although Samsung products are sizably cheaper than those of competitors such as Apple, the company’s

Business Economics Essay Example | Topics and Well Written Essays - 3000 words

Business Economics - Essay Example (Hay, 2009, p. 461) The bubble formed by the housing price was the initiator of the general global economic crisis brought over to the whole world. What initiated the crisis was the bursting of the house price bubble in the United States and the problem was magnified by the aggressive mortgage lending prices. The housing market or the real estate market comprises of several differentiated markets as the owner occupied market, rental housing market, urban business properties market that is the factories, shops and the offices, the agricultural land markets and the recreational properties. There are five main reasons that are held responsible for the house price bubbles; they are low interest rates, development of new and innovative financial products which facilitated the availability of the credit, the tax treatment was also in favor of the debt-financed and owner-occupied housing; shortage in the supply of land in the attractive urban areas, increase in the purchase of houses as a r ental property or for speculative purposes. (Muller, Almy, Engelschalk, 2009, pp. 17-20; UK Economy in ‘Worst Crisis’ in 60 years, 2008) The Housing market Crash The UK housing market The real house prices have grown stronger over the past years, which have been volatile accompanied by macroeconomic fluctuations. The UK Housing market has gone through significant turbulence since the early 1980. In the period between 1982-1989, the market experienced a rapid rise in the housing prices, but meanwhile the housing prices showed a downward trend during the period 1990-1992 resulting in house price inflation. Accruing to the high economic growth in the years 1992 and 1993, the housing market in UK witnessed an increase in the average house price inflation, which originated in London and the South East region, which had a rippling down effect towards the north. The UK housing markets are the result of the personal sector wealth proportion, which was invested in the owner occu pied dwellings. The UK owner occupied dwellings accounted for 20 percent in 1960, which increased to 40 percent in 1990s. Highest owner- occupation rates and the lowest private renting characterize UK. The main reason which drove the financial turbulence in the housing market in 1980s are the liberalization of the financial markets and the policy of ‘Right to Buy’ which ensured the transformation of the population from the rented house to the private own occupied house. The increase in the competition among the lenders resulted in the fact that the borrowers get loans. This resulted in an increase in the household sector mortgage indebtedness from 25 percent in 1980 to 75 percent in 1992. The average mortgage advance reached its highest 60.1 percent in the year 1986, and thereby remained at a steady 58 percent for the rest of the 1980s. The house price inflation was fueled by the amalgamation of factors like increased in demand for housing, rising incomes, and an increa ses in the competition to supply mortgage lending. (Figueira, Glen, Nellis, 2005, p. 1756; UK house prices drop like a rock, 2008) The reason behind the crash The main reason behind the UK housing crash was it’s serendipitously stumbling upon the economic growth trajectories, which were mainly consumer-led and private debt financed in the early 1990s. Both

Nutrition project 3 Essay Example | Topics and Well Written Essays - 750 words - 1

Nutrition project 3 - Essay Example ject, is to plan one week’s meals for yourself based on the information from USDA ChooseMyPlate – SuperTracker (http://www.choosemyplate.gov/supertracker-tools/supertracker.html). If you have access to the Internet, be sure to use the interactive feature to generate the exact pyramid based on your age, gender, and activity level. (Throughout this assignment, you may substitute another food guide pyramid for SuperTracker if you find one that more closely suits your needs, but you need to include it—or the reference information for it with this project.) After you get your meals planned, make a list of all of the ingredients needed to make them (or the prepared items to buy). Take this to your local source(s) for food (grocery store, restaurant, farmer’s market, bakery, etc.) and record the price of each item on the list. (You will not need to purchase these items, simply record their costs.) 8. Conclude with a short description of what you learned about planning and implementing a healthy diet. What requirements of SuperTracker did you find most difficult to meet, either financially or by food preference, or both? What do you anticipate will be your biggest challenge(s) to meeting your nutritional needs as an adult? How you organize this project is up to you, just remember that organization is part of your overall grade. If you choose to create an interactive project or website that is published to the Internet, be sure to insert the URL and any access information in the space below. The total amount of calories consumed at the end of each day is 2200. Based on the daily food plan from the food tracker, each day must include 7 ounces of grains, 3 cups of vegetables, 2 cups of fruit, 3 cups of dairy products and 6 ounces of protein foods. Below is my menu for a week; The shopping list for each of the food categories is tabulated below. At the bottom of each row of foods, the total amount that it would cost to purchase the foods is written in US dollars.

Lab Report Essay Example for Free

Lab Report Essay Heat it to 90 C and hold this temperature for 10 minutes. 2. Cool it to 50 C in a bath of ice water. 3. Shake the culture bacteria to free it from lumps and add to the milk. 4. Transfer the inoculated milk into the beaker or jar. Cover. 5. Incubate the milk for 4 hours at 43 to 46 degrees until clotted. Clotting of milk indicates the bacteria utilized the sugars and underwent fermentation. 6. Chill for 1 – 2 hours 7. Stir the yogurt to make the texture smooth. 8. Package and consume III. Results and Discussion Kind of Milk| Taste| Color| Texture| Smell| Low- fat milk| Yogurt-like| Beige| Smooth| Sour| Full-cream milk| Very Sour| Beige| Thick| Very sour| In the table above, the reason why there were only 2 kinds of milk is because 2 groups used low fat milk and the other 2 used full-cream milk. As being compared from the table above, using full-cream milk caused the taste and the smell of the product (yogurt) to be extra sour. Yogurt is naturally sour because of the acid present in it. Also, the full-cream milk caused the texture to be thicker compared to the yogurt used with low-fat milk. Even though different kinds of milk were used, the color of the yogurt was the same, which was Beige. IV. Conclusion Based on the given results and discussion of the data, the characteristics (taste, color, texture, and smell) of the yogurt will depend on what kind of milk will be used for the yogurt making process. V. Recommended If one were to do the same experiment above, the group would recommend that they use low-fat milk to make their own yoghurt.

Style of food Essay Example for Free

Style of food Essay Each country has its own unique style of food. Depending upon where you are, even food with the same ingredients will have a different taste. In a way, food has a unique charm in the sense it is able to reflect cultural and geographic differences. For example, in Asia almost all food is served with a bowl of rice, but in Western culture most of the time food in served with bread. When rice is served in America, it has a different taste different from what I was used to eating in Korea because it was grown in a different environment utilizing a different method. Keep in mind, however, each individual person has his or her own distinct classification system of judging whether specific food is good or not. This is why radical changes in food culture can occur. Nowadays, food in Asia is becoming westernized and items such hamburgers and pizzas are among Asian teenagers’ favorite foods. Now, my parents’ generation thinks food of this type is not healthy and believes they are terrible items as a diet staple. My father, for example, he needs to have a bowl of soup, at least four different kinds of dishes, and a bowl of rice for every meal including breakfast. For most my parents’ generation, this is the accepted classification system of eating a meal. Conversely, several American friends of mine think Korea’s most favorite food, â€Å"Kimchi†, literally stinks. This is ironic as when we are introduced to a new type of food, we first judge by smell, how it looks, its ingredients and, finally, by taste. Just as my friends are skeptical of trying new food, I still have trepidation towards food that I have never eaten before. My interest in food has also tied in with my interest in African Studies and I decided to eat at a restaurant called â€Å"MOYA† upon the recommendation of a Professor Lacy. Despite the fact that told me how authentic this place is, I assumed the food would not that much different from what I usually eat figuring the restaurant must be somewhat westernized in order to attract people’s tastes that are not familiar with Ethiopian food. However, my foregone conclusions were wiped away the moment I stepped into the restaurant, as there were a lot of subtle touches and I could feel the air of Ethiopian culture. Along with a strong smell of frankincense, an Ethiopian waitress came out to fit us with traditional Ethiopian clothes. My first impression of MOYA was that the restaurant had strong cultural and spiritual roots. All the tables were made out of wood with dark red color and the chairs were decorated with paintings of ancient African people. In the middle of the restaurant, there were decoration of actual bowls and pots made out of dark red clay that were used for cooking. In fact, all the colors in the restaurants were close to nature. While not fancy, the place was rather cozy. My friends and I ordered three dishes but when the food was served, I automatically thought it was an appetizer because it consisted of one big dish that was put in the middle of the table and only a few bread balls were in it. Soon after, three clay bowls were brought out and the waitress started to pour some soup out of each bowl. She told us to start eating, but there were no spoons or folks. We figured out the dishes we ordered were stew-like food, so we straightened the bread balls and dipped them into the soup in order to eat. We also realized that we had to eat with our fingers as well. The food was unexpectedly delicious and taste was surprisingly not that different from Korean food. In fact, one dish tasted just like curry. The bread balls that were served with the soup were called injera and they particularly made the Ethiopian food taste different. The meal was a departure from the norm for me since we were eating with our fingers, we were not able to take a big bite of the bread so this automatically slowed down our speed of eating and we were allowed to have a conversation while eating, which is very unusual in Korean culture. Korean people always in a hurry at the dining table because there are too many sub-dishes conversation is kept to a minimum. So, the Ethiopian dinner was another good way to unite with a group of friends and have a fun evening with a casual dinner. Since a young age, I learned how to use chopsticks and was taught as eating with your fingers is uncivilized. Therefore, it was shocking to me when I had to use my fingers to eat as it was taboo in my classification system. However, I realized that it contradicts my own ideas because I often use my fingers to eat such as when eating hamburgers, pizza, chicken wings and chicken tenders. It just appeared to be more offensive because I never had Ethiopian food before and I never knew how to eat that type of food before in my entire life. The experience at the MOYA meant a lot to me as it gave me the chance to be more mature as an anthropologist in the way it provided a vehicle for learning and understanding a different culture. Many times, the ability to learn about new cultures is rooted in investing time in new experiences. If a person spends too much time surrounded by the same environment, then there will be a tendency to look at the world through a very narrow vision or, worse, develop a mindset full of preconceived notions or stereotypes. While eating in a new restaurant may seem like a minor affair, the reality is that it can open up a huge window of the mind in terms of becoming more accepting of new people and new cultures.