An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 20,000 units while that for laptops is 5,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000. Answer the following question: a.Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.
An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 20,000 units while that for laptops is 5,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000. Answer the following question: a.Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 14E
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An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 20,000 units while that for laptops is 5,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000.
Answer the following question:
a.Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.
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