Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $
ID: 2733639 • Letter: K
Question
Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $28,000 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 profit line to $38,000 so he can obtain the bank's approval for the loan.
% of Sales
Sales $280,000 100%
Cost of supply chain purchases 190,400 68%
Other production costs 30,800 11%
Fixed Costs 30,800 11%
Profit 28,000 10%
a. What percentage improvement is needed in a supply chain strategy for profit to improve to $38,000? What is the cost of the material with a $38,000 profit? A decrease of ____% in supply chaing costs is required to uield a profit of $38,000 for a new cost of supply chaing purchases of $______.
b. What percentage improvement is needed in a sales strategy for a profit of $38,000? What must sales be for profit to improve to $38,000$. An increase of ____% in sales is required to yiled a profit of $38,000, for a new level of sales of $______.
Explanation / Answer
Answer:a A decrease of 5.3% in supply chaing costs is required to uield a profit of $38,000 for a new cost of supply chaing purchases of $180400.
Answer:b An increase of 17.01%in sales is required to yiled a profit of $38,000, for a new level of sales of $327620.
Current Situation Supply chain strategy % increase or decrease Sales strategy % increase or decraese Sales 280000 100.00% 280000 0.0% 327620 17.01% Cost of materials (supply chain) 190400 68.00% 180400 -5.3% 222781 17.01% Other Production cost 30800 11.00% 30800 0.0% 36038 17.01% Fixed cost 30800 11.00% 30800 0.0% 30800 0% Profit 28000 10.00% 38000 35.7% 38000 35.7%Related Questions
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