Reference no: EM131910710
PROBLEMS
1. If purchases were 45% of sales and other expenses were 45% of sales, what would be the increase in profit if, through better purchasing, the cost of purchases were reduced to 40% of sales?
2. If suppliers were rated on the following basis, what is the ranking and total ranking of the two suppliers listed? Please make certain to list the total rank of each supplier.
|
Factor
|
Weight
|
Supplier A Rating
|
Supplier B Rating
|
Supplier A Ranking
|
Supplier B Ranking
|
|
Function
|
7
|
7
|
9
|
|
|
|
Cost
|
5
|
9
|
7
|
|
|
|
Technical Assistance
|
4
|
4
|
6
|
|
|
|
Credit Terms
|
3
|
6
|
4
|
|
|
|
Total Ranking
|
|
|
|
|
|
3. A company is negotiating with a potential supplier for the purchase of 100,000 gizmos. The company estimates that the supplier's variable costs are $3 per unit and that the fixed costs, depreciation, overhead, etc., are $35,000. The supplier quotes a price of $10 per unit. Calculate the estimated average cost per unit. Do you think $10 is too much to pay? Could the purchasing department negotiate a better price? How?
4. To make a particular component requires an overhead (fixed) cost of $6,000 and a variable unit cost of $3.00 per unit. What is the
a)total cost and
b)average cost of producing a lot of 1,000?
c) If the selling price is $15 per unit, what is the break-even point?