1. Practical Uses of a CMA Jared Jones, CMA, CPA

2. Main Focuses of CMA Part 1 Financial Performance Ethics for Mgmt Accountants Cost Accounting Systems Cost Allocation Techniques Operational Efficiency Budgeting Concepts Cost and Variance Measures Performance Measures Internal Controls Part 2 Financial Decision Making Basic Financial Statements Ratio Analysis Profitability Analysis Investment Risk Financial Instruments/Cost of Capital Asset Management CVP Analysis and Marginal Analysis Decision Analysis / Risk Management Investment Decisions

3. 37970 – ½” Blue-Lock Elbow Question: Should we build this at our NSL factory, Ningbo China factory or outsource to a 3 rd part supplier?

4. 37970 – ½” Blue-Lock Elbow

5. Main Focuses of CMA Part 1 Financial Performance Ethics for Mgmt Accountants Cost Accounting Systems Cost Allocation Techniques Operational Efficiency (MFG Floor) Budgeting Concepts Cost and Variance Measures Responsibility Accounting Performance Measures Internal Controls Part 2 Financial Decision Making Basic Financial Statements Ratio Analysis Profitability Analysis Investment Risk Financial Instruments/Cost of Capital Asset Management CVP Analysis and Marginal Analysis Decision Analysis / Risk Management Investment Decisions

6. Profitability Analysis / Make vs Buy / Make vs Make Make vs Make: Compare variable costs between factories Make vs Buy: Compare variable cost to produce at your factory and compare to landed cost of 3 rd part supplier. Qualitative vs Quantitative: There is more that goes into the decision besides the lowest cost (quantitative). You also need to look at other factors like patent protection, lead times, production oversight, foreign exchange volatility, etc (qualitative). CMA helps you understand some of these qualitative points

7. Common variable expenses Direct Variable Expenses Direct Material Direct Labor Direct Overhead Freight Duty Depreciation of Equipment (Units of Production). Not always considered in analysis. Sunk Cost

8. 37970 Bill of Material Questions: How do I identify variable OH expenses from BOM? What about variable SGA expenses that aren’t on BOM?

9. Manufacturing Overhead

10. SG&A

11. 37970 Orbit Ningbo

12. 37970 Summary List of remaining questions CMA credential helped me answer/evaluate: Impact to standard rates for each entity (labor, overhead, etc) Absorption variance impact Foreign Currency volatility (risk level) Patent protection issues Lead time impact (potential missed sales and cost of capital) Extended profit Impact to company (USA and Ningbo)

13. Products Offered by Orbit

14. Main Focuses of CMA Part 1 Financial Performance Ethics for Mgmt Accountants Cost Accounting Systems Cost Allocation Techniques Operational Efficiency (Company Wide) Budgeting Concepts Cost and Variance Measures Responsibility Accounting Performance Measures Internal Controls Part 2 Financial Decision Making Basic Financial Statements Ratio Analysis Profitability Analysis Investment Risk Financial Instruments/Cost of Capital Asset Management CVP Analysis and Marginal Analysis Decision Analysis / Risk Management Investment Decisions

15. Division 1 Underground

16. Division 2 – Patio Lawn & Garden

17. Questions that Needed to be Answered How do we allocate Revenue between divisions? Revenue Centers How do we allocate “shared” COGS expenses? Cost Centers How do we allocate SGA expenses between divisions? Profit Center / Revenue Center / Cost Center How do we create top to bottom income statements for each division? Basic Financial Statements How does this impact the budgeting process? Budgeting Concepts How does this impact operating processes for the entire company? Operational Efficiency How does this impact the overall structure of the organization (Org Chart) Responsibility Accounting

18. Other Misc Projects Customer Profitability (back-end $ and support) WHSE Profitability (WHSE vs DROP) Required Sales Price to Obtain Corporate Profit / CM Objectives Budgeting process for foreign entities Financial Analysis on overall company performance Capital Expenditures

19. What Was The Value Add From These Projects New transparency of product line profitability Now that there is transparency, people can now ask the right questions Now we know where to focus resources Nuances of profitability are now understood Responsibility can now be tracked and enforced Processes are more efficient and accurate Overall profitability has increased Becoming a CMA helped me not only identify weakness in the system. It helped me improve the immediate needs of the company and provided the background to spearhead projects that perspired after there was more transparency of company results.

21. Potential Challenges with Foreign Entities IT systems may not talk to each other no visibility into their system Income Statement Transactions Bill-of Materials Many of these reasons why so many companies utilize excel. No matter the MRP/ERP systems companies use, they can dump data to Excel (common language among accountants) Production and Quality oversight Language barrier Foreign Currency (swing in RMB last year…) Delayed responses (12 hour differences) Personal Relationships may not be as strong Bank regulations (Audit issues with Cash Confirmations) Getting cash into the entity Lead times to get product into USA All of the items below create issues for both entities. These types of problems make you look at overall processes of the organization and figure out how to streamline processes.