Atlantic Computer Case

FUTRONICS Inc. is a private company located in Lexington mainly categorized for modems, monitors, disk drives and terminals. It is moreover in to sales and services. This case is about the replacement of Futronics’s central office stores by an outside service provider. In this case supply management manager have an opportunity for investigating selected outsourcing in-house services.

6. How does the current reimbursement level of $140,000 per case affect a decision to use or not use marginal cost pricing? Does the amount of excess capacity affect the decision? Why?

250,000 + 5,000 + 57,500 = 312,500 total base . 250,000/312,500 = 80% of the actual price of the arrangement to be allocated to the software. 5,000/ 312,500 = 1.6% of the actual price of the arrangement to be allocated to the installation. 57,500/ 312,500 = 18.4% of the actual price of the arrangement to be allocated to the technical support. The relative price of the software would be $240,000, the relative price of the installation would be $4,800 and the

This report is dealing with the case of ACME Electronics vs. Otto Gunter. Gunter purchased a computer from ACME Electronics in 2002. In 2004, the hard drive crashed and he brought it in to ACME Electronics to have it replaced, as well

Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro

The cost of implementation of the options: It is found in the survey that 20% customers had had repeat work. Considering 5% as redundant, the customer erosion could be as large as $4.37 million (Exhibit 2). Thus making the investment of $75000 is completely justified.

1. Consider Dunlap’s statement on page 3 of the case: “Stakeholders! Every time I hear the word, I ask how much did they pay for their stake? There is only one constituency I am concerned about and that is the shareholder primacy? Do you agree or disagree with Dunlap’s view of shareholder primacy? Explain

In order to determine if leasing the hardware and software for 24 months would be beneficial, we first calculated the NPV and EAC for two different scenarios.  The first scenario consists of computing the NPV and EAC of

2. Compares the returns of the asset to the market over a period of time (Beta)

Something to think about if we are going to continue to use floor tape. The floor tape in Bay C in particular is torn up and dirty. Seems like the life span is only about one year in places with heavy traffic.

Now that the initial startup phase of our company is complete, our team of Analysts has determined what we have deemed reasonable costs, considering that our definition of “reasonable” aligns with yours. In order to defend our stance on what we feel is reasonable, we have considered the nature of costs, such as air travel for business meetings and the use of our high quality materials, by researching the market for affordable, high-quality materials and have put standards in place to keep air travel valid for these government contracts. With the understanding that although the nature of the cost may be considered acceptable, the amount of the cost may not meet standards when it comes to costs defined as “reasonable” (Murphy, John Edward; Guide to Contract Pricing, pg. 47). With this in mind, we continue to research the market to find adequate material at a much lower cost. We have used this data to create what we feel is a cost that would not and should not exceed what any prudent person would pay in a competitive business environment. We are aware of the competition and have made it a strong incentive of ours to save on costs for the items that we are providing to you. Allowability of our costs is guided by the 52 generally applicable cost principles that are based on specific laws and policies (Murphy, John Edward; Guide to Contract

a. Investigate the original calculation of Setup Cost (denoted by “S” in the case), is there

The main difference between investing in the Zinser machine and maintaining the status quo is an initial investment of $8.25 million and the receipt of $608,000 in after-tax sales proceeds from selling the existing machine. Additionally, there is an initial $50,000 ($32,000 after-tax) cost for training employees, but this cost is only incurred once (see exhibit 3). In their first year using the Zinser machine there will be a 5% decrease in sales volume, but selling price will increase 10%. Material costs per pound will be the same as the status quo, but conversion costs will decrease to $0.4077 per pound per year due to lower power, maintenance and return costs. Days of inventory held will also drop to about 20 days. All other assumptions are the same as the status quo. In this scenario, the NPV of the Hunter Plant is about $15.87million if Aurora invests in the new Zisner machine (see exhibit 3).

Ever since Ross (1976) proposed the Arbitrage Pricing Theory (APT) as an alternative to the capital pricing model, many economists and investors have applied APT across different markets. Whereas the traditional capital pricing model explained asset returns with one beta, sensitivity to the market return, APT decomposes the return with a multiple number of factors. This idea became particularly popular for investors who aim to gain systematic risk other than market risk. However, the model specification aspect has been challenging to many practitioners as the theory does not require any specific sets of variables to be used (Azeez 2006).

The following table (table 3) is a comparison of the major cost components. These are U.S. List prices, and may not always compare the same configurations, functions, or features. In some cases, the incremental per-agent charge is based on total defined agent seats, while in others it is based on concurrently logged-in agents, or ports.