Annual Fixed Variable Costs Location Costs per Shipment Denver $4,800,000 $4.55 Santa Fe $4,500,000 $6.20 Salt Lake City $3,200,000 $7.50
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Wiebe Trucking, Inc., is planning a new warehouse to serve
the western United States. Denver, Santa Fe, and Salt Lake
City are under consideration. For each location, annual fixed
costs (rent, equipment, and insurance) and
costs
listed in the following table. Sales projections range from
500,000 to 600,000 shipments per year.
a. Plot the total cost
graph.
b. Which city provides the lowest overall costs?
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- Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?Calculate the average revenue per night. Rates & availability2347892Review Itinerary367495Guest Info103471Confirmation72498Revenue$ 23,464,220Room Nights143285
- Breakeven between Two AlternativesGiven:Option A – Buying a MachineFC = 400,000.00 pesosSV = 80,000.00 pesosi = 10.00%n = 8 yearsAnnual Maintenance cost = 5,000.00 pesos/yearProduction cost = 800.00 pesos/dayOutput = 40 units/dayOption B – Manual ManufacturingAnnual cost = 30,000.00 pesos/yearProduction cost = 1200.00 pesos/dayOutput = 30 units/daya. Option A Annual Cost Equation = ?b. Option B Annual Cost Equation = ?c. Units per year for Breakeven = ?A firm’s manager must decide whether to make or buy a certain item used in the production of vending machines. Making the item would involve annual lease costs of $150,000. Cost and volume estimates are as follows:Make BuyAnnual fixed cost $150,000 None Variable cost/unit $ 60 $ 80 Annual volume (units) 12,000 12,000 a. Given these numbers, should the firm buy or make this item?b. There is a possibility that volume could change in the future. At what volume would the managerbe indifferent between making and buying?A leading manufacturer of video games is about to introduce four new games. The accompanying tablesummarizes price and cost data, Combined fixed costs equal $600,000. A marketing research study predicts thatfor each unit sold of Diablo, 2 units of Call of Duty: Modern Warfare, 3 units of Sekiro and 4 units of Starcraft IIwill be sold.GamesDiablo Call of Duty Sekiro Starcraft IISelling Price (in dollars) 55 48 33 22Variable cost/unit (in dollars) 22 17 12 11a) How many product mix units must be sold to break even?b) How does it translate into sales of individual games?
- Percentage Service Provided toDepartment Cost S1 S2 P1 P2Service 1 (S1) $ 112,000 0% 40% 40% 20%Service 2 (S2) 44,000 20 0 40 40Production 1 (P1) 345,000Production 2 (P2) 216,000Total $ 717,000Brief Exercises 7-15 and 7-16 require the following information:7-15 What percentage of S1’s costs is allocated to P1 and to P2 under the direct method?7-16 What percentage of S2’s costs is allocated to P1 and to P2 under the direct method?7. Mrs Bayson completed Fashion Design Programme at a Technical University in Ghana . Mrs Bayson decided to join a dress-making group to gain experience for her career. In the course of her internship Mrs Bayson has observed that there are always a lot of beautiful pieces of leftover clothes that go waste thereby requiring the shop to spend money to dispose them. She is then thinking of designing fashioned carrier bags with the leftover clothes. Efua needs ideas on what factors to consider in decide to go or not go for the development of the conceived business idea. (a) Discuss four key things to consider in deciding to pursue or not to pursue the conceived business idea (b) Discuss one social or environmental problem that would be solved by Efua’s business idea should it become a realityCase Study on Distribution at Hewlett PackardEven well-managed organizations do not always work as efficiently andeffectively as management would like. At Hewlett-Packard (HP), billions ofdollars of product are being shipped -from computers and diagnostic devices totoner catridges each year. Customer orders come in 24 hours a day, 365 days ayear.• Nearly 16,000 different products are requested daily and have to beshipped from six different warehouses which are located 30 or moremiles apart.• It often takes weeks to get the products into the customer’s hand.• This is a serious problem if customers have contracts with HP statingdeliveries are to be made in four hours or less.• That means that from the time a customer calls the HP customer serviceline, they will have their replacement part and be back in operationwithin four hours no matter where that customer is located.One of the characteristics that distinguishes an outstanding organisation is theability to know when problems need to…
- Case Study on Distribution at Hewlett PackardEven well-managed organizations do not always work as efficiently andeffectively as management would like. At Hewlett-Packard (HP), billions ofdollars of product are being shipped -from computers and diagnostic devices totoner catridges each year. Customer orders come in 24 hours a day, 365 days ayear.• Nearly 16,000 different products are requested daily and have to beshipped from six different warehouses which are located 30 or moremiles apart.• It often takes weeks to get the products into the customer’s hand.• This is a serious problem if customers have contracts with HP statingdeliveries are to be made in four hours or less.• That means that from the time a customer calls the HP customer serviceline, they will have their replacement part and be back in operationwithin four hours no matter where that customer is located.One of the characteristics that distinguishes an outstanding organisation is theability to know when problems need to…Case Study on Distribution at Hewlett PackardEven well-managed organizations do not always work as efficiently andeffectively as management would like. At Hewlett-Packard (HP), billions ofdollars of product are being shipped -from computers and diagnostic devices totoner catridges each year. Customer orders come in 24 hours a day, 365 days ayear.• Nearly 16,000 different products are requested daily and have to beshipped from six different warehouses which are located 30 or moremiles apart.• It often takes weeks to get the products into the customer’s hand.• This is a serious problem if customers have contracts with HP statingdeliveries are to be made in four hours or less.• That means that from the time a customer calls the HP customer serviceline, they will have their replacement part and be back in operationwithin four hours no matter where that customer is located.One of the characteristics that distinguishes an outstanding organisation is theability to know when problems need to…Case Study on Distribution at Hewlett PackardEven well-managed organizations do not always work as efficiently andeffectively as management would like. At Hewlett-Packard (HP), billions ofdollars of product are being shipped -from computers and diagnostic devices totoner catridges each year. Customer orders come in 24 hours a day, 365 days ayear.• Nearly 16,000 different products are requested daily and have to beshipped from six different warehouses which are located 30 or moremiles apart.• It often takes weeks to get the products into the customer’s hand.• This is a serious problem if customers have contracts with HP statingdeliveries are to be made in four hours or less.• That means that from the time a customer calls the HP customer serviceline, they will have their replacement part and be back in operationwithin four hours no matter where that customer is located.One of the characteristics that distinguishes an outstanding organisation is theability to know when problems need to…