The ability of being able to manage the supplies that are needed for the company to be able to continue growth and operate in the most efficient way is called Supply Management. This not only allows relates to the ability of the organization to be able to manage, obtain, and identify essential supplies for organizational operations, but is also allows the organization to be able to obtain the required information, physical good, and services they need (Supply Management: An Overview, 2019). The essential focus on supply management is maintaining control of cost of supplies, gathering of data to make sound business decisions, and resource allocation. Peyton Approved organization has a supplies total of $27,986.00. It is critically essential that the organization has clear understanding of raw materials, cost, and the products made in the end to ensure that there is no errors and risk has been ensured to be minimized in how the organization manages its supplies.
Note 02 – Inventory
The organization of Peyton Approved uses a Last In, First Out (LIFO) inventory management system. While this LIFO system would be good to use for somethings, it would not be recommended to be used on all of the organizations products. The organization currently has a merchandise inventory valued at $229.27. The organization, should ideally be continually looking for ways in which it would be possible to keep this amount at a minimum cost. This cost minimized would be associated with supplies, manufacturing of products, merchandise, and inventory. One of the methods that can be used to keep current and accurate inventory reports in order to be able to forecast supply demand and also avoid shortages. Instituting the use of inventory reports would be highly recommended as it will help ensure accurate inventory management at both locations of the organization and help ensure that neither location has a supply shortage.
Note 03 – Depreciation
The organization uses straight-line method in order to calculate the amount of depreciation. This method of calculation, as described by Bragg (2019) states that this method is calculated by equally distributing the depreciation through the life time of the given asset, the simplest method to use, and has the least likelihood of errors. While they use this method at the main location, it would be highly recommended that they continue to use particular method at the second location as well. Additionally, this would also allow the management team, investors, and shareholders in the organization to look at the equipment depreciation evenly at both locations, and would keep the comparisons on an equal playing field. When looking at both the Pro Forma Balance Sheets and Income Statements it can be seem that the depreciation is values at $2,143.00
Note 04 – Long Term Debt
The organization has one long-term debt, which is a loan that is scheduled to last 5 years, or 60 months with an interest rate of 7.5 APR. The loan was originated on June 1, 2016 and the principal amount of the loan $15,00, which is due on May 31, 2026, which only interest amount of $211.46 being due on an annual basis. Would recommend paying the loan off as quickly as possible, however if the loan had to be spread out, ear marking $3,000 each year, would allow for an even spread of the $15,0000 over a 5-year period. Total loan with the addition of interest for the full duration would be $16,057.30, would yearly would be $3,211.46.
Bragg, S. (2019). Straight line depreciation. Retrieved April 3, 2022, from https://www.accountingtools.com/articles/2017/5/15/straight-line-depreciation
Supply Management: An Overview. (2019). Retrieved April 3 2022, from https://www.investopedia.com/terms/s/supplymanagement.asp