Difficulty in buying items required because of late vendor payments and high return of parts and material to vendors. The Receiving, Warehouse, and Quality Control Departments High inventory levels are maintained causing the need for more warehouse space. Quality Control costs have increased due to receiving defective parts from vendors. The company is experiencing cash flow problems and net operating losses. Managers do not have timely and accurate performance reports for decision making purposes.
Performance reports are at a high level.
They do not provide for segment, unit cost or product profitability reporting. Process and Job Order Cost systems do not include all costs, applied overhead is omitted. Administration Administrative expenses have increased substantially in all administrative departments, including high office rent. Business Plan and Budgets Business Plan and budgets have not been updated and managers do not know what is expected of them in meeting company goals and objectives.