İzmir Forwarding’s road transport price for one pallet of paint is TL 90/km. in a certain route. Variable costs per unit equal TL 40/km. The company expects total fixed costs to be TL 90,000 for the next month at the projected transport level of 2,000 pallets. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.

İzmir Forwarding’s road transport price for one pallet of paint is TL 90/km. in a certain route. Variable costs per unit equal TL 40/km. The company expects total fixed costs to be TL 90,000 for the next month at the projected transport level of 2,000 pallets. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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İzmir Forwarding’s transport price for one pallet of paint is TL80/km. in a certain route. Variable costs per unit equal TL32. The company expects total fixed costs to be TL72,000 for the next month at the projected transport level of 2,000 pallets. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. a) Suppose management believes that a TL16,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to cover additional expenditure? b) Suppose that management believes that a 10% decrease in the selling price will result in a 10% increase in sales. If this proposed decrease in selling price is implemented, compute the change in the operating income. c) Write an alternative action for the company your own, to improve the performance, compute the change in the operating income. d) Which alternative (A, B, C) should be chosen?…
İzmir Forwarding’s road transport price for one pallet of paint is TL 90/km. in a certain route. Variable costs per unit equal TL 40/km. The company expects total fixed costs to be TL 90,000 for the next month at the projected transport level of 2,000 pallets. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated Calculate the safety margin of İzmir Forwarding in pallets. Suppose management believes that a TL 20,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to cover additional expenditure? Suppose that management believes that a 10% decrease in the selling price will result in a 10% increase in sales. If this proposed decrease in selling price is implemented, compute the change in the operating income.
A manager is trying to decide whether to purchase a certain part or to have it produce internally. Internal production could use either of two processes. One would entail a variable cost of P17 per unit and an annual fixed cost of P200,000, the other would entail a variable cost of P14 per unit and an annual fixed cost of 240,000. Three vendors are willing to provide the part. Vendor A has a price of P20 per unit for any volume up to 30,000 units. Vendor B has a price of P22 per unit for demand of 1,000 units less, and P18 per unit for larger quantities. Vendor C offers a price of P21 per unit for the first 1,000 units, and P19 per unit for additional units. Required: If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint?
Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
Kien Sneakers is interested in investigating the level of contribution to profits and overheads that it can expect from a planned new trainer. It intends to set a sales price of €80 per pair. Fixed costs (marketing and general administration) associated with the new trainers are expected to be €350,000. The firm has estimated following range of cost of sales and distribution costs: Cost of Sales (€ per unit ) Cost of Sales (probability distribution) Distribution Costs (€ per unit ) Distribution Costs (probability distribution) 28 0.5 4 0.25 33 0.3 5 0.25 38 0.2 6 0.5 Required: Set up the profit ‘model’ for the new trainer. Estimate the profit contribution under ‘base’ case, ‘best’ case and ‘worst’ case scenarios. Explain the difference between a ‘scenario’ analysis and a ‘sensitivity’ analysis, with examples.
how can the changes below affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company’s break-even point, but also the desired margin of safety. If Mirabel purchases the new equipment for $1,200,000, it will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. If Mirabel invests the additional $650,000 in fixed marketing expenses, sales of the Model 301 are expected to increase by 8%. If the projection is that sales will increase by 10% in the coming year. The sales volume remains fixed but there is a 5% increase in variable expenses (materials cost) for the Model 101 and 301, and a 10% increase in variable expenses for Model 201.
The Can Division of Sheffield Corp. manufactures and sells recyclable containers externally for $0.97 per container. Its unit variable costs and unit fixed costs are $0.24 and $0.11, respectively. The Packaging Division wants to purchase 50,000 containers at $0.36 per unit. Selling internally will save $0.02 a container.Assuming that the Can Division has sufficient capacity, what is the minimum transfer price it should accept? a.$0.24 b.$0.36 c.$0.34 d.$0.22
A business encountered the following problem while choosing between alternative locations X and Y. The total fixed costs of X and Y places are 100,000 TL and 200,000 TL, respectively. The unit variable costs are 5 and 7 TL for X and Y location, respectively. The selling price at X site is 10 TL. What should be the selling price of the product in place Y if it is desired that the transition to profitability is in question at the same production amount in both places?
Wisconsin Snowmobile Corporation is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $30,000, but inventory would increase by $250,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 13.5 percent. a-1. Determine the extra cost or savings of switching over to level production. a- 2. Should the company go ahead and switch to level production? multiple choice Yes No b. How low would interest rates need to fall before level production would be feasible? Note: Input your answer as a percent rounded to the nearest whole number.
Habib transport company Itd, operates a fleet of delivery trucks in Singapore. The Company has determined that if a truck is driven 135,000 kilometers during a year, The average operating cost is 11.8 cent per kilometers. If a truck driven 95,000 kilometers during a year, the average operating cost increases to 13.6 cents per kilometers. Requirement a) Using high-low method estimate the variable and fixed costs elements of the annual cost of truck operators. b) Express the variable and fixed costs in the form y= a +bx e) if a truck were driven to 100,000 kilometers during a year, what total cost would you expect to be incurred?
2) A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would entail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A has a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities. a) If selling price per unit is $45 what is the breakeven point. b) If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint? c) Which Alternative would entail the highest profit?
Two alternative locations are under consideration for a new plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson location is superior in terms of costs. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm's customers prefer local suppliers. The selling price of the product is $375 per unit in either case. Use the following information to determine which location yields the higher total profit per year: Location Jackson Dayton Annual Fixed Cost $2,100,000 $3,000,000 Variable Cost per Unit $45 $80 Forecasted Demand per Year 40,000 units 39,000 units The annual profit from Jackson is $8575000. (Enter your response as an integer.)