Maurice Tutor

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    Argosy University/ Phoniex University/
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    Phoniex University
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Category > Management Posted 05 Jun 2017 My Price 12.00

Household Manufacturing Inc

Household Manufacturing Inc. sells its product for $45 each.

 

 

Sales volume averages 2,000 units per year.

 

 

Recently, its main competitor reduced the price of its product to $30.

 

 

Maximum expects sales to drop dramatically unless it matches the competitor's price.

 

 

In addition, the current profit per unit must be maintained.

 

 

Information about the product (for production of 2,000) is as follows:

 

 

 

 

 

 

Standard Quantity

 

 

Actual Quantity

 

 

Actual Cost

 

 

Materials (pounds)

 

 

3,200

 

 

3,500

 

 

35,000

 

 

Labor (hours) 900

 

 

1,000

 

 

30,000

 

 

  

Setups (hours) -

 

 

125

 

 

3,000

 

 

  

Material handling (moves)

 

 

-

 

 

200

 

 

4,000

 

 

Warranties (number repaired)

 

 

-

 

 

450

 

 

11,000

 

 

 

 

 

Required:

 

 

a. Calculate the target cost for maintaining current market share and profitability.

 

 

b. Calculate the non-value-added cost per unit.

 

 

c. If non-valueadded costs can be reduced to zero, can the target cost be achieved?man

 

Answers

Maurice Tutor
(5)
Status NEW Posted 05 Jun 2017 07:06 PM My Price 12.00

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