Meridian Telescopes

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Meridian Telescopes: Production Planning
ACTG 2020 - Section S – Group 6

To: Cathy Kain, President of Meridian
Re: Production Planning

Overview

Meridian has been manufacturing fine telescopes for 80 years and has developed a well-earned reputation for quality craftsmanship. The company itself produces and sells two distinct lines of telescopes, which are produced in its 200,000 square feet facility. Furthermore, both lines have been developed to appeal to distinct target audiences who have an interest in the company’s products. The older line, for which there has been steady demand, consists of small professional telescopes that ultimately have laid the foundation for Meridian’s strong reputation. Following the success of
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The selling price of $300 less labor, materials, variable overhead, AND selling and marketing expense leaves us to a CM of $142.5 per unit made in-house. In determining the cost of the binoculars we must include the variable expense of selling and marketing as it represents a cost that can ultimately be avoided if we choose not to produce the product. Alternatively, we can determine our CM per unit outsourced using the same analysis, but using the purchase price to reach a CM of $95 per unit if outsourced. Using these two figures we get an incremental CM gained from outsourcing of ($47.5) or an incremental benefit from making it in house of $47.5. Lastly, it is important to note the capacity demand for Binoculars is 1 Square Feet per unit. Incremental CM From Outsourcing 1 Unit of Pro | | $ 1,250.00 | Space Provided Per Unit Outsourced: | | | 100SqFt | Incremental CM from producing one Unit of Binoculars | $ 47.50 | Square Feet Required Per Binocular:
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