Reference no: EM132227147

Bricks and Morse Inc. (B&M) is a small microbrewery that produces high-quality, small-batch nitrogen beers based in Nova Scotia. It is contracted to sell 4,000,000 litres of beer annually (representing 80% of the prior year's production) to the government- owned Nova Scotia Liquor Distribution Branch (NSLDB).

It is October 2017 and B&M is planning an expansion that will allow it to produce an extra 5,000,000 litres of beer annually - double its current production capacity. The sales team has been working with a liquor distributor outside of Nova Scotia, Burges Liquor Ltd. (Burges). Burges has built up a reputable image in Canada for beer distribution, and B&M is excited to leverage that experience. Burges has recently submitted a proposal to distribute a portion of B&M's excess capacity in return for a percentage of revenues. Information on the Burges proposal is included in Appendix I.

You, CPA, are the new controller of B&M and have just received an email from the vice- president of operations regarding the proposed expansion. He is hearing concerns from the production team and would like you to look into it. His email says:

I am not sure why the production team is not excited about our expansion - we should all be excited about increasing sales! I think it might have to do with their performance measures.

Currently, the sales department is measured on the growth in sales volume relative to the previous year's volume and receives a sales commission (1.25% of total sales, no commission on sales to NSLDB). The production department is measured on manufacturing cost per unit and the number of defects.

Please write me a memo to consider this and provide me with any recommendations you may have regarding evaluation of the sales and production teams? Also, please evaluate the Burges proposal and provide a recommendation on what is best for B&M.

You agree to look into this and move onto the next email, which is from the senior vice- president of finance:

In order to expand our production capabilities, we are considering whether to lease or buy the required equipment. I have outlined the two options we are looking at in Appendix II.

In your memo, I also would like you to focus largely on the quantitative analysis and provide your recommendation on thisdecision.

Your memo should not exceed fivepages.

Attachment:- Assignment Problem.rar