What challenges might managers at ses encounter

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Reference no: EM132536052

Solar Energy Systems (SES) sells solar heating systems in residential areas of Southern Queensland. A successful sale results in the home-owner purchasing a solar heating system and obtaining rebates, tax credits and financing for which SES completes all the paper work. The company has identified three major activities that drive the cost of selling heating systems: identifying new contracts (varies with the number of new contacts); travelling to and between appointments (varies with the number of kilometres driven); and preparing and filing rebates and tax forms (varies with the number of solar systems sold).

Actual cost for each of these activities in 2018 and 2019 are:

                                                                              2018                          2019

Average cost per new contact                      $8.00                    $7.00

Travel cost per kilometre                              0.55                    0.65

Preparing and filing cost per new system           275.00                  250.00

After expecting high costs in 2018, SES used value engineering to reduce the cost of selling solar heating systems. Managers at SES want to evaluate whether value engineering has succeeded in reducing the selling cost per sale by the targeted 8% in 2019.

Actual results for 2018 and 2019 for SES are:

                                                                      2018                        2019

Sales of heating systems                          175                     188

Number of new contracts                         225                     240

Kilometres driven                                   1900                   1750

Required:

Question 1: Calculate the cost per sale in 20

Question 2: Calculate the cost per sale in 20

Question 3: Did SES achieve the target cost per sale in 2019? Explain your answer.

Question 4: What challenges might managers at SES encounter in achieving the target cost and might they overcome these challenges?

Reference no: EM132536052

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