CASE STUDY: MCNULTY’S MUSCULAR MATERIALS (MMM)

Clayton McNulty, owner of McNulty’s Muscular Materials (MMM), is sitting in his dim office located at the top of an old brown brick building, in an industrial area of

South Boston. Clayton had just gotten off the phone with Sarah Holden, his long-time friend and sole supplier of his most popular fabric, when his telephone rings again. This call is from John Masterson, his number-one client.

‘‘Clay Buddy,’’ John says. ‘‘Just got off the phone with the owner of Southside Sluggers. Guess who got the New Jersey contract? That’s right, pal, and I want you to get ’em to me. That’ll be 10,000 jerseys and I need them by the end of the month. How much do you love me, Clay baby? I’ll get you the designs by Monday. Ciao.’’

Clayton hangs up the phone, stares out of his small, double-paned office window and watches the rain slide down the glass. Sure Clayton was excited about the large bid, but how was he to produce the baseball jerseys in time? The season was to start in three months. The one-month deadline was deadlocked, and there was no room for negotiation. The fans will want the new merchandise before the season gets under way.

MMM was a small sports attire manufacturer that primarily focused on making jerseys for local sports teams. Luckily the factory had been set up for expansion, and was capable of handling a production of this magnitude. But where would he get the needed fabric to produce such a large volume? The most he had ever had to produce was one tenth of the size that John had just ordered. A big order like this means big publicity and more orders were sure to start rolling in over the next few months.

A call to Sarah confirms his suspicions. She can’t produce that much fabric in such a short amount of time. He needs another supplier and he needs one fast. It’s a rainy day in South Boston and Clayton McNulty has some tough decisions to make.

Questions:

1. What potential options does Clayton have to procure the needed volume of fabrics in order to meet the deadline?

2. What are the trade-offs for each of these potential options?

3. What should Clayton do?

4. What lessons can be learned from Clayton’s situation?

The following transactions and events that occurred in the village of kowitt gorge during the calendar year 2019: 1. the village commissioners adopted the following budget: estimated revenues: property taxes $1,850,000 all other revenues 300,000 total revenues $2,150,000 appropriations: all departments other than police $1,000,000 police—salaries 600,000 police—fringe benefits 450,000 police—supplies 80,000 total appropriations $2,130,000 2. the village received, in cash, property taxes of $1,840,000 and all other revenues of $295,000. 3. the village made cash payments, charging the following appropriations: all departments other than police $1,000,000 police—salaries 595,000 police—fringe benefits 390,000 4. the administrator of fringe benefits received an invoice for police employee health insurance in the amount of $95,000, together with a letter from the insurance provider, explaining that the large increase was caused by a change in federal laws. the invoice could not be paid because the police—fringe benefits appropriation had a balance of only $60,000 (appropriation of $450,000 minus expenditures in item 3 of $390,000). as a result, the village commissioners amended the budget as follows: increase: appropriation for police—fringe benefits $35,000 decrease: appropriation for police—salaries 5,000 decrease: appropriation for police—supplies 25,000 use of fund balance 5,000 5. the village paid the invoice for $95,000, referred to in item 4 above, charging the appropriation for police—fringe benefits. 6. the police department placed po 2019a for firearms in the amount of $30,000 and po 2019b for uniforms in the amount of $20,000, all charged to the appropriation for police—supplies. (enter these pos as one transaction.) 7. after receiving po 2019a, the supplier notified the police department that a change in the design of the weapons would increase the cost to $32,000. the department sent the supplier an amended po, increasing it by $2,000. 8. the police department received the uniforms ordered on po 2019b, together with an invoice for $20,000. the department approved the invoice for payment. record the transactions and events applicable to the appropriations for police—fringe benefits and police—supplies in the following appropriations ledger. notes: use a negative sign with your answers if: 1. the amount entered in the appropriation column is a debit (dr.) rather than a credit (cr.); or 2. the amount entered in the expenditures column is a credit (cr.) rather than a debit ( in the available appropriation column, enter the appropriate balance after every transaction/event, even if a transaction isn't recorded in a particular ledger for that transaction. for transaction 6, enter both purchase orders (pos) as one combined transaction. appropriations ledger appropriation: police - fringe benefits appropriation encumbrances expenditures available transaction cr. dr. cr. dr. appropriation 1 answer 0 answer 0 answer 0 answer 0 answer 0 2 answer 0 answer 0 answer 0 answer 0 answer 0 3 answer 0 answer 0 answer 0 answer 0 answer 0 4 answer 0 answer 0 answer 0 answer 0 answer 0 5 answer 0 answer 0 answer 0 answer 0 answer 0 6 answer 0 answer 0 answer 0 answer 0 answer 0 7 answer 0 answer 0 answer 0 answer 0 answer 0 8 answer 0 answer 0 answer 0 answer 0 answer 0 appropriations ledger appropriation: police - supplies appropriation encumbrances expenditures available transaction cr. dr. cr. dr. appropriation 1 answer 0 answer 0 answer 0 answer 0 answer 0 2 answer 0 answer 0 answer 0 answer 0 answer 0 3 answer 0 answer 0 answer 0 answer 0 answer 0 4 answer 0 answer 0 answer 0 answer 0 answer 0 5 answer 0 answer 0 answer 0 answer 0 answer 0 6 answer 0 answer 0 answer 0 answer 0 answer 0 7 answer 0 answer 0 answer 0 answer 0 answer 0 8 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0