ACCT 556 RANK Great Stories Here/acct556rank.com ACCT 556 RANK Great Stories Here/acct556rank.com | Page 10

the potential inefficient use of capacity and the effect that this has
on profits.
All raw materials are currently purchased from outside suppliers
and no difficulty is foreseen in obtaining the necessary inventories
for production in the future. All inventories are currently
considered to be at the lowest safe levels possible given the delivery,
production, and sales cycles.
Given the current production capacity, the company will have room
for expansion for the next few years without building new facilities
or expanding the current building. The company will also have the
option of starting a second production shift to support future sales if
necessary; therefore, increased production will be obtainable
through purchasing additional equipment or increasing production
hours. At this time, however, the president is not considering a
second shift due the additional $1.00 per hour shift differential that
would be necessary to pay the hourly second shift workers.
The company had a cash flow problem in 2005 but has always
managed to make all payments on a timely basis. The president
wishes to increase the amount of cash on hand in the future so that
the company will have a greater margin of safety. To date, the
company has not had difficulty obtaining financing for expansion
and does not foresee any future difficulties in obtaining necessary
funding for legitimate purposes.
The company has paid a consistently good dividend to the
stockholders. The president would like to continue this p