Outsourcing

For this discussion, consider the following scenario:

Acme Company operates an employee dining area. Acme owns the building in which the dining hall is located and owns the kitchen needed for the operation—all stoves, refrigerators, freezers, microwaves, deep fryers, warming lights, cafeteria line and food warmers, and so forth. The dining area employees are employees of Acme Company.
Acme operates the employee dining as an employee benefit. They operate it at a loss. Currently, it is costing Acme approximately $1.00 per meal served. For example, a lunch that Acme charges employees $3.00 for costs Acme closer to $4.00.
Several other companies in the area have outsourced their employee dining operation to Windsor Foods.
Your supervisor has asked you to contact Windsor Foods to explore a possible outsourcing.
Windsor Foods tells you that they can operate the facility profitably if they charge the employees only what Acme is presently charging them. They say that they can do this because of their experience in food service and because of their central kitchen and large-scale buying of ingredients. They offer to buy all of Acme’s equipment for $30,000 cash upfront. They also offer to pay Acme $500 a month for the use of the dining area and to pay for the dining area utilities. They offer to hire all of Acme’s food service employees, who will continue to do the same jobs but be employed by and paid by Windsor Foods.

Post 2–3 paragraphs about this opportunity for Acme to outsource their food service. Do NOT focus solely on the accounting considerations. Include in your discussion:

Does the move to outsource to Windsor foods seem worthy of investigation? Explain why or why not.

What more would you need to do to be sure you are making the right move?

What additional information do you need?

What are the risks associated with outsourcing employee food services?

Thinking about your own career, how can you use “outsourcing” as a means to get your foot in the door for a full-time position?

How can you leverage Capella Connect and other networking resources as means to get your next position?

• Be sure to:
• Apply high-level skill in critical thinking, research, and writing.
• Cite and reference resources using APA style and format, giving appropriate credit for another’s work.
• Use feedback from your instructor and peers to improve writing skills.
• DISCUSSION PARTICIPATION SCORING GUIDE
• DISCUSSION PARTICIPATION GRADING RUBRICCriteriaNon-performanceBasicProficientDistinguishedApply relevant course concepts, theories, or materials correctly.
  25%Does not explain relevant course concepts, theories, or materials.Explains relevant course concepts, theories, or materials.Applies relevant course concepts, theories, or materials correctly.Analyzes course concepts, theories, or materials correctly, using examples or supporting evidence.Collaborate with fellow learners, relating the discussion to relevant course concepts.
  25%Does not collaborate with fellow learners.Collaborates with fellow learners without relating the discussion to the relevant course concepts.Collaborates with fellow learners, relating the discussion to relevant course concepts.Collaborates with fellow learners, relating the discussion to relevant course concepts and extending the dialogue.Apply relevant professional, personal, or other real-world experiences.
  25%Does not contribute professional, personal, or other real-world experiences.Contributes professional, personal, or other real-world experiences, but contributions lack relevance.Applies relevant professional, personal, or other real-world experiences.Applies relevant professional, personal, or other real-world experiences to extend the dialogue.Support position with applicable knowledge.
  25%Does not establish relevant position.Establishes relevant position.Supports position with applicable knowledge.Validates position with applicable knowledge.

Store Closing?

For this discussion, consider the following scenario:

• The privately owned Baker Company was founded in 1960. The company manufactures kitchen cabinets and has been very successful, expanding from one facility to twelve facilities in the same and other states. All facilities but the original are located near interstate highways. The original facility, which is no longer the headquarters, is in a downtown area of a major city (which grew up around it) with relatively high real-estate taxes. It has had a negative contribution margin and a net loss for the last five years. The founder is retired and three of his children want to close the facility. The fourth does not, because it “was Dad’s first place and I went there every day after school.” She believes they can bring the facility back to profitability if the city’s downtown revitalization project succeeds and they dedicate the first floor of the facility to retail. 
• Post 2–3 paragraphs about whether the original facility should be closed. Consider as part of your post:
• Your definition for “negative contribution margin.”

Whether the fact that the facility is not near an interstate makes a difference in the decision.

Would it make a difference if the company were publicly traded?

Might there be additional costs, in addition to revenues, to convert the first floor of the facility to retail?

What risks may be associated with leasing to retail stores?

What is your recommendation? Close and sell the facility or modify the first floor to be able to lease to retail stores.

DISCUSSION PARTICIPATION SCORING GUIDE

DISCUSSION PARTICIPATION GRADING RUBRICCriteriaNon-performanceBasicProficientDistinguishedApply relevant course concepts, theories, or materials correctly.
25%Does not explain relevant course concepts, theories, or materials.Explains relevant course concepts, theories, or materials.Applies relevant course concepts, theories, or materials correctly.Analyzes course concepts, theories, or materials correctly, using examples or supporting evidence.Collaborate with fellow learners, relating the discussion to relevant course concepts.
25%Does not collaborate with fellow learners.Collaborates with fellow learners without relating the discussion to the relevant course concepts.Collaborates with fellow learners, relating the discussion to relevant course concepts.Collaborates with fellow learners, relating the discussion to relevant course concepts and extending the dialogue.Apply relevant professional, personal, or other real-world experiences.
25%Does not contribute professional, personal, or other real-world experiences.Contributes professional, personal, or other real-world experiences, but contributions lack relevance.Applies relevant professional, personal, or other real-world experiences.Applies relevant professional, personal, or other real-world experiences to extend the dialogue.Support position with applicable knowledge.
25%Does not establish relevant position.Establishes relevant position.Supports position with applicable knowledge.Validates position with applicable knowledge.

To learn about making outsourcing and deletion of services, products, and departments, refer to the following resources:

Marshall, D., McManus, W., & Viele, D. (2020). Accounting: What the numbers mean (12th ed.). New York, NY: McGraw-Hill.

Chapter 15, “Cost Control.”

Chapter 16, “Costs for Decision Making.”

McIvor, R. (2011). Outsourcing. In J. Law, Business: the Ultimate Resource (3rd ed.). London, UK: A&C Black.

Expansion Recommendation

Introduction

This portfolio work project will allow you to review information and risks associated with an investment to expand an organization. As this information will be shared broadly across the organization, you will have a choice in your final deliverable audience and will organize your deliverable to meet the needs of that audience.

Scenario

ZXY Company is a food product company. ZXY is considering expanding to two new products and a second production facility. The food products are staples with steady demands. The proposed expansion will require an investment of $7,000,000 for equipment with an assumed ten-year life, after which all equipment and other assets can be sold for an estimated $1,000,000. They will be renting the facility. ZXY requires a 12 percent return on investments. You have been asked to recommend whether or not to make the investment.

Your Role

You are an accounting manager. Your boss has asked you to review and provide a recommendation on the expansion based on information that has been provided.

Requirements

In preparing and supporting your recommendation to either make the investment or not, include the following items as part of your analysis:

Analysis of financial information.

Identification of risks associated with the investment. Consider:

How risky the project appears.

How far off your estimates of revenues and expenses can be before your decision would change.

The difference if the company were to use a straight line versus a MACRS depreciation.

Recommendation for a course of action.

Explanation of criteria supporting your recommendation.

Financial Information

As part of your analysis you might find that additional information from marketing, accounting, or finance would be useful in making an informed and well-supported recommendation. In a real workplace setting you would have the ability to ask for that information. However, for the purposes of this assignment, you can make assumptions about the values of that data or ratios in support of your recommendation.

Accounting worked with the marketing group to create the ZXY Company Financial Statements spreadsheet provided in the Resources for the new products business and the new facility.

Notes about the financial information:

The expense line labeled SQF FDA Mandates refers to the costs of complying with Food and Drug Administration requirements.

Depreciation expense is calculated using 7-year life modified accelerated cost recovery system (MACRS).

Deliverable Format

Depending on the audience you choose to address, use one of the following options:

Report for a mid-management audience. Prepare a 3–4 page report detailing your recommendation and the information you used to make your recommendation.

Presentation for top leadership. Prepare a presentation of at least 12 slides detailing your recommendation and the information you used to make your recommendation. You may use your choice of presentation software. Include notes with additional details.

Keep in mind that your recommendation may be shared with others, so your materials should be designed for clarity and readability.

Related company standards for either format:

The recommendation report is a professional document and should therefore follow the corresponding Academic and Professional Document Guidelines, including single-spaced paragraphs.

In addition to the report or presentation, include:

Title (slide or page).

References (slide or page).

Appendix with supporting materials. 

At least two APA-formatted references.

Evaluation

By successfully completing this assignment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:

Competency 2: Apply principles of accounting to assess financial performance.

• Analyze financial statements for decision support.
• Explain risks associated with an investment decision.
• Competency 3: Analyze accounting information to support business decisions.
• Recommend a course of action based on financial information.
• Explain how financial criteria support a decision.
• Competency 4: Communicate financial information with multiple stakeholders.

Communicate accounting information clearly.

Your course instructor will use the scoring guide to review your deliverable as if they were your boss. Review the scoring guide prior to developing and submitting your assignment.