5star Tools Case Study

Only the incremental costs and benefits are relevant. In particular, only the variable manufacturing overhead and the cost of the special tool are relevant overhead costs in this situation. The other manufacturing overhead costs are fixed and are not affected by the decision.

The budget analysis shows that the labor hours of the firm are higher than the budgeted amount. As such, the firm needs to evaluate the cost benefit analysis of making or buying their products. To make this decision, various factors need to be considered. Before making the decision, Peyton needs to evaluate the marginal costs and revenue of making versus buying the products. The firm should take the option which provides the highest marginal profit which is the

In order to meet customer demands for higher product quality, to comply with federally-mandated environmental regulations, and to reduce production costs, HCC must spend $2,000,000 within the next three years to upgrade equipment. The upgrade is expected to result in production efficiencies that will lower material and labor costs by reducing defective products, process waste, in-process inventory, and production man-hours through simplified work processes. It has been over a decade since significant modifications were made to the production facilities. Those changes were mostly technical in nature and did not substantially alter work processes or reduce overall employment. The average productivity gain in the industry for the past five years has been 3% per year. Financing for the loan to purchase the equipment

d. How much overhead cost do you think Bridgeton and the consultants implicitly assumed they would save by outsourcing these two products?

Data indicates that Model C210 has a higher contribution margin per unit of the constraint. Therefore it is recommended that until the constraints in coating and sharpening are removed, production should concentrate its limited resources on production of the more profitable model. The Model C210 contributes $1250 per hour compared to $537.50 per hour given the constraint in the coating and sharpening stage.

2. If the department that produces Item 345 was a profit center and if you were the manager of that department, would it be to your financial advantage to lower the price?

11. What are the amounts and timing of the acquisition investment’s free cash flow from 2013 through 2022? You will need to find an appropriate growth rate and extend Exhibit 6 out through 2022.

First of all, purchasing a light meter and hiring an operator would reduce large amount of unnecessary cost incurred from cranberries that are misidentified by the chief berry receiver. The case reports that half of 450,000 bbls of berries were misidentified as No.3. Since $1.50 was paid for every No.3 berries, we can say that $337,500 was overpaid. Assuming that the cost of this system is about $40,000 and the cost of full-time skilled operator is about $34,944 (as a straight-time pay rate for the full-year employee) per year, we can calculate the return on investment in the light meter system. The return would be 4.503 ($337,500/$74,944). Even though, the operator gets paid more than the amount above, the return on the investment would still be positive.

1. Using the historical data as a guide (Exhibit 6.1), construct a pro forma (forecasted) profit and loss statement for the clinic's average month for all of 2010 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit?

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).

The cost of the SB5 full kit is $1,147.00. The SB5 full kit includes an interpreters manual, examiners manual, technical manual, item 1 (routing subtests), item 2 (nonverbal subtests), item 3 (verbal subtests), 25 record forms, and a few manipulatives (Roid, G.H., Barram, R.A., 2004). The SB5 focuses on five main factors of cognitive ability, which are: fluid reasoning, knowledge, quantitative reasoning, visual-spatial processing, and working memory. SB5 users should also be familiar with the technical aspects of APA guidelines. Interpreters should have a greater level of training and supervised experience. People that administer the SB5 fit into one of two categories: they are individuals with training to administer and score psychological

He argues that, while many processes were developed to improve metalworking after the war, the ones that ultimately prevailed were not the ones which were most efficient. He demonstrates how several alternate techniques actually had better results more quickly that the NC (Numeric Control) machining which eventually came to dominate the industries, and in fact the NC machines were often slower for a significant period of years.

Given the incomplete data, it is hard to quote any specific figure. Elements that need to be conidered include the amount of workers that the agenyc employs, the calibre and brand of tools that they purchase as well as the details of other 'material' and quality and quanitty of this material.

Since material cost is one of the key cost drivers for the production of the units, it is best to take

We assumed that the cost of graphite which according to exhibit 8 has been growing slower year on year would grow steadily at 4% and that power costs would grow at 12% per year up to 1989. We also assumed that the benefits of laminate technology will only be felt starting in 1981. With 1980 as the base year, the NPV calculation was done as at December, 1980 and we assumed that the cash injection of $2.5million dollars would occur instantaneously in December 1980. Using a median assumption of power cost savings of 17.5%, we arrive at an NPV of $12.865million for the laminate investment. The applicable range and full calculations are presented below.