Precision Worldwide

12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

The product cost per unit under absorption costing is $15.00 and under variable costing are 10.60.

1) In this exercise, you viewed the settlement of costs to finished goods and manufactured output settlement. As noted in the exercise, each should be for $42,000.

= Unit Selling Price – Unit Variable Cost = $9.00 – ($1.25 + $0.35 + $1.00) = $6.40

Excluding preproduction sunk costs, including a cost of capital 16%, and sales of 113 units and a per unit sales price of $16 million, the net present value (NPV) of continuing with the Tri Star is -$ 1,829,666,246.

100 plastic rings are 279.65. Plastic is more durable $506 to produce 100 steel rings than it does $100 plastic rings. Conduct a survey to see what machines are compatible with taking the plastic rings prior to converting over to all plastic. A lot of machines won’t take the plastic rings. Email to all loyal customers. Disadvantage is that we can’t reach all customers. $1350 per 100 for each sale of plastic and steel. Instead of losing 100% of everything get back what you paid for it and take it from

We could use the slow down period to do a change over process on the machines to start making the plastic rings. We would need to invest $1,800 for the necessary tools and equipment to start producing the plastic rings. During the next three months we should begin marketing the plastic rings and educate our customers on the improved benefits of the plastic rings. The profit made on the plastic rings would allow us to offer a discount on the sales price for the steel rings to offset the risk of our customers finding out that we are selling plastic at the same price as our steel, risking them buying our machines.

Industrial Grinders, N.V. has decided to start manufacturing and selling plastic rings for use in their machines. Currently, they manufacture and sell steel rings, along with the machines they also manufacture and sell through another division of the company. They recently discovered that a competitor in France will now be selling plastic rings. These plastic rings will serve the same purpose as the steel rings Industrial Grinders manufactures. However, they cost less to manufacture and they last longer. Management has decided that Industrial Grinders will now start to manufacture plastic rings. Lawrence Bridgeman, General Manager of the German plant, is tasked with

Wriston Manufacturing Corporation (WMC) is faced with a Detroit plant that is no longer viable because of underinvestment, labour issues, and product-process mismatch. This has lead to low sales figures, low return, and high burden rates (as calculated by the company). The issues at the Detroit plant will be reviewed and options will be presented. A recommendation to address the Detroit plant will be be made based on this review.

Multiplying $829.37 times 50 yields $41,468.50. When added to the costs of using Chicago ($109,470), the total cost now

with marked down prices of steel rings. And, (4) the production of plastic rings at a cheaper cost will enable the company to bring a message of dynamism to the market despite the prospect of competition. (Hill, 2008)

When PWI sells 100 plastic rings, they are expected to make $838.25 more in profit than the sale of 100 steel rings. It costs $1107.90 to produce one hundred steel rings. When that is compared to creating a hundred plastic rings, which only costs $279.65, it becomes more evident why PWI should

Beginning with the stamping press, the next thing I would do is figure out what the expected useful life is for each alternative. Because the SX-65 has a useful life of 5 years and the MD-40 has a life of 10 years, I would expand the life horizon of the SX-65 from 5 years to 10 years so that the two alternatives are comparable. Once the stamping press alternatives are easily comparable to one another, I would calculate the net

Obviously, if they sale at the same price, 100 plastic rings will get $197.25 more profit than steel rings. However, Anders Ericsson, the development engineer, estimated that the plastic rings could be produced by mid-September, so before mid-September, I.G has to sell steel rings on hand. Fortunately, Henri Poulenc was said to be selling the plastic ring at about the same price as the I.G steel ring, so I.G wouldn’t get strong shock from Henri Poulenc. Of course, Henri Poulenc will get higher profit, but only analyzing from the price, I.G and Henri Poulenc are in the same position, so it depends on demanders’ preference which kind of rings they like. And I.G could sell the steel rings in different markets, which are not covered, by plastic rings of Henri Poulenc. It avoids direct conflict. Steel inventory is a big weakness of I.G, so it’s a good time to consume a large amount of steel. Assuming the sales continued at the current rate of 690 rings per week before mid-September, it would consume 19400 steel rings. During the slack time, I.G could ask labors to convert the steel inventory into rings to satisfy the supply amount before mid-September, because at that time, the labor cost will be about 70% of regular wages so that decreases the cost to produce steel rings. Those steel rings only need to satisfy the supply amounts for 4 months using, because after mid-September, plastic ring will be used instead of steel. If there are more steel rings converted than demanded,

The case study talks about the problems faced by the Europe’s largest manufacturers of plastic household items, producing over 500 products in its French Factory.