Reference no: EM131774271
Based on historical data, the forecasted annual demand for the disposable earphones is 22500 units. The SWG’s manufacturing plant will operate 50 weeks per year.
SWG's financial analysts have established a cost of capital of 17% on the use of funds for investments within the company. In addition, accounting information shows that a total of 4% of costs were spent on taxes and insurance related to the company's inventory. It has been estimated that another 2.5% was lost due to inventory shrinkage, which included damaged goods as well as pilferage. Finally, 4.5% was spent on warehouse overhead, including utility expenses for heating and lighting.
An analysis of the purchasing operation shows that approximately two hours are required to process and coordinate an order for Southwest Airlines regardless of the quantity ordered. Purchasing salaries average $28 per hour, including employee benefits. In addition, a detailed analysis of 135 orders showed that $2375 was spent on telephone calls, e-mails, paper, and postage directly related to the ordering process.
Currently the company has a contract to purchase the disposable earphones from a supplier at a cost of $0.44 per unit. However, with the opening of the Southwest Goods manufacturing facility, Southwest Airlines will now have the capacity to produce support items themselves. As a result, Southwest Goods is considering the alternative of producing the disposable earphones itself.
Forecasted utilization of equipment shows that production capacity will be available for the earphones being considered. The production capacity is available at the rate of 1000 sets of earphones per week. It is felt that with a short lead-time, schedules can be arranged so that the disposable earphones can be produced whenever needed. Production costs are expected to be $0.41 per pair of earphones.
A concern of management is that setup costs will be significant. The total cost of labor and lost production time is estimated to be $100 per hour, and it will take a full 7-hour shift to set up the equipment for producing the earphones.
Problem: Clearly define the holding cost (h), ordering cost (S) (when ordering from supplier), and set-up cost (S) (when producing the part) for each scenario (ie. Make and Buy).
Equipment at the beginning of the period
: The company issues bonds and uses the proceeds to purchase $500,000 in machinery and equipment at the beginning of the period.
|
Solving problem using the mid-point formula
: Using the mid-point formula, determine whether the following goods are elastic, inelastic or unit elastic: Price quantity demanded $12 50 $10 70 $8 80 $6 95 1.
|
Calculate the company return on investment
: The Clipper Corporation had net operating income of $380,000 and average operating assets of $2,000,000. Calculate the company's return on investment (ROI)
|
Managers should betied to segment performance
: Do you think compensation for senior segment managers should betied to segment performance? Why or why not?
|
Define the holding cost and ordering cost and set-up cost
: Clearly define the holding cost (h), ordering cost (S) (when ordering from supplier), and set-up cost (S) (when producing the part) for each scenario.
|
What effect does the rental activity have on her agi
: Assuming Alexa receives $20,000 in gross rental receipts, What effect does the rental activity have on her AGI for the year
|
Measuring performance with roi and residual income
: Readings for this module focus on different ways of measuring segment performance. In addition to being a good management practice, segment performance
|
Identify information outside the annual report
: Identify information outside the annual report that may be useful to you in making this investment decisions. Please provide reason(s) for the information
|
Calculate expected profit for each price
: Question 2) Determining the profit Maximizing price - Calculate expected profit for each price. Which price maximizes company profit
|