The business during the manufacture and sale of large quantities of soup are likely to experience gains or losses due to the difference in foreign exchange translations. Losses or gains will also be experienced because of misjudgment on what, where or when to invest. This is a case of capital financing decision. A. Specifications The Oriental Delight soup product should and has to be produced just as the formula that was formulated by Specialty Laboratory. Apart from the production, the product must also be canned and labeled according to the requirements of Hen Hao. The specifications are well laid down and no change shall be made to them unless through writing. Concerning the specifications there is a risk that Gumpbell may not produce the goods exactly as prescribed and when this takes place, the company will suffer the damages as the goods are rejected by Hen Hao. Such an impact can be avoided if Gumpbell is sure of its production capacity to be able to fulfill the contract to the end. In addition, the labor employed by Gumpbell must posses the skills required by customers and when this is not available then Gumpbell has to recruit such a labor to avoid such risks. B. Quantities Quantities will depend on the demand requirements by the consumers as studied by the supplier (Hen Hao). Hen Hao’s annual demand is likely to be ranging between, 200,000 to 450,000 cases; this is within the term as prescribed in the supply agreement. Now Hen Hao is not capable of estimating that their current demand is and the time of the year they expect it to be shipped. Apart from the quantities depending solely on demand, the costs per unit would also influence the quantity that Hen Hao would demand. C. Purchase Order Procedure Hen Hao already has the specification of how they demand that the product be manufactured. The manufacturer already holds the specifications; what Hen Hao needs to do each time is to make purchase orders through order forms supplied by the producers (Gumpbell). Such order will be submitted online using internet resources. The purchase orders must be submitted early enough (30 days prior to when they are required) when it is expected that they would be acted upon in time. The purchase order will give the manufacturer the quantity demanded and hence decide on the amount to produce; as well, the shipping instructions and the shipping date are also included. The manufacturer is given a period from which they relax, this is despite the fact that an acknowledgement of Purchase order receipt. D. Forecasts At the onset, Hen Hao could not predict its requirements of the soup within a given specific time. This scenario is likely to change over a given period, as Hen Hao will be in a position to now conduct such forecasts and submit the purchase order forecast to Gumpbell. Failure to submit the forecasts would cause a risk that the soup may not be prepared in advance and the consumers whose appetites are sharp enough would be disappointed. Forecasts are important since most of the time they act as a guide towards that which is required. PHASE II: Transportation, Delivery, Transfer of Title and Risk of Loss Once a sales agreement has been got into, the tendency that the goods would move from one party to the other is certain. The movement involves physical movement as well as contractual movements. Just as goods would move from the manufacturer to the producers is the same way such goods are likely to move from the distributor to
Issue in case transaction Date PHASE I Manufacture and Sale of Product This form of business is taking place between businesses in two countries that are quite far away apart. Gumpbell Soup Company is based in the United States while Hen Hao is based in China…
However it has also brought to the fore, various setbacks – software piracy being one of the critical ones. The free availability of pirated software coupled with the ability to access, download and use the same without impunity has only accelerated the growth of piracy in the virtual world.
The court, by upholding a trial court finding, held that Any Kind failed to act in good faith after cashing a check of $10,000, but on the other hand, acted in good faith by cashing the other check of $5,700. Guarino had not been a regular customer of Any Kind.
The letter of credit is a document that is most widely used and most secure commercial instrument for financing international business transactions. As Gertrude Boateng states in the article, Documentary Credit Transactions : A Case Of Double Standards "a documentary credit is an arrangement whereby a bank acting at the request or on the instructions of the applicant for the credit (the buyer) agrees to make payment according to the terms of the contract of sale to the beneficiary (the seller) provided the seller tenders certain documents to the bank in relation to goods to be sold."
A novation ordinarily arises when a new individual assumes an obligation to pay what was incurred by the original party to the contract and the original debtor is totally released from the obligation, which is transferred to someone else (Law Encyclopedia).
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According to the case study, the accountant faces the technical issue of coercion by his boss to make a contradicting accounting statement in his favor. The transactions have an adverse effect on the financial information of the company because of
1 pages (250 words)Case Study
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