2 Solve the following two (2) problems 4 Problem #1 Kamal Fatehl, production man
ID: 2400741 • Letter: 2
Question
2 Solve the following two (2) problems 4 Problem #1 Kamal Fatehl, production manager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown in the statement below)-inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Kamal would like to improve the profit line to $25,000 so he can obtain the bank's approval for the loan. 7 You MUST use Goal Seek to determine the answers to both parts. 9 10 11 Sales 12 Cost of materials 13 Production costs 14 Fixed costs 15 Profit 16 17 a) What percentage improvement is needed in a supply chain strategy for profit to improve to $25,000? What is the cost of material with a $25,000 profit? 18 19 b) What percentage improvement is needed in a sales strategy for profit to improve to $25,000? What must sales be for profit to improve to $25,000? 20 21 22 Sales 23 Cost of materials 24 Production costs 25 Fixed costs 26 Profit 27 28 a) 29 30 31 b) 32 % of sales Current Situation 70% $ 12% $ 12% $ 250,000.00 175,000.00 0,000.00 30,000.00 15,000.00 Original % of sales Current Situation Supply chain % of sales Supply Chain Strategy Original % of sales Sales Strategy 70% $ 12% $ 12% $ 50,000.00 175,000.00 0,000.00 30,000.00 15,000.00 Percentage Change Material Cost Note: Difference (Percentage change) (new-old)/old Percentage Change Required Sales 34Explanation / Answer
a). Total cost = $175,000 + 30,000 + 30,000 = $235,000
Percentage improvement in supply chain strategy = (25,000 - 15,000) / 175,000 * 100 = 5.7%
New supply chain purchase = 175,000 - 25,000 + 15,000 = $165,000
A decrease of 5.71% in supply chain costs is required to yield a profit of $25,000 for a new cost of supply chain purchases of $165,000.
(25,000 - 15,000) / 15,000 * 100 = 66.7%
b). Percentage improvement in sales strategy = (25,000 - 15,000) / 250,000 * 100 = 4%
New level of Sales = 250,000 - 25,000 + 15,000 = $240,000
An increase of 4% in Sales ie required to yield a profit of $25,000, for a new level of sales of $240,000.
% of Sales Supply chain strategy Percentage Increase/ Decrease Sales $250,000 100% $250,000 0% Cost of supply chain purchases $175,000 70% $165,000 -5.7% Other production costs $30,000 12% $30,000 12% Fixed costs $30,000 12% $30,000 12% Profit $15,000 6% $25,000 66.7%Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.