Hau Lee Furniture Inc spends 45% of s sales do ars in the supply chain and nds i
ID: 355851 • Letter: H
Question
Hau Lee Furniture Inc spends 45% of s sales do ars in the supply chain and nds its current profit o S2400 ?na equate The bank is in strg on an equipment Hau would like to improve the profit line to $29,000 so he can obtain the bank's approval for the loan proved profit picture p to approval of a loan for s r e new Current Situation Sales Cost of material Production costs Fixed cost Profit $80,000 $12,000 (15%) $8,000 (10%) a) What percentage improvement is needed in the supply chain strategy for profit to improve to 529,000? What is the cost of matenal with a $29 000 profit? A decrease 0 % in mater al supply chan costs is required to yield a profit of S29 000, or a new matenal cost of S Enteryour response or e percentage decease the new material cost as a whole number) a e de apace ander er your response ategy for profit to improve to $29 0007 What must sales be for profit to improve to $29 000 An increase of % in sales is required to yield a profit of 529 000, for a new new level of sales of SEnter your response for the percentage increase to one decimal a whole number) place and enter your response for the new sales as Enter your answer in each of the answer boxes STUDENT SERVICES COMPANY LEARNING SERVICES Online Tutoring Jobs Chegg Study Help 101Explanation / Answer
We have following information -
Current Situation
Sales
$80,000
100%
Cost of material
$36,000
45%
Production cost
$12,000
15%
Fixed cost
$8,000
10%
Profit
$24,000
30%
a. A decrease of $5,000 in material? (supply-chain) costs is required to yield a profit of $29000 from $24,000, therefore a new material cost = $36,000 - $5,0000 = $31,000.
Percentage change in material (supply-chain) costs = {($31,000 - $36,000)/$36,000}*100
= - 13.9% (negative sign is for decrease in cost of material)
New Situation (Supply Chain strategy)
% of sales
% Change
Sales
$80,000
100%
Cost of material
$31,000
39%
-13.9%
Production cost
$12,000
15%
Fixed cost
$8,000
10%
Profit
$29,000
36%
A decrease of 13.9% in material (supply-chain) costs is required to yield a profit of $29000, for a new material cost of $31,000.
b. In the sales strategy; an increase in sales is required to yield a profit of $29000 where cost of material and production cost will change with proportion to change in sales (% to sales will be fixed) and Fixed cost will not change, from trial and error, we have calculate a new level of sales of $92,500 where profit is $29,000.
Percentage change in sales = {($92,500 - $80,000)/$80,000}*100
= 15.6%
New Situation (Sales strategy)
% of sales
% Change
Sales
$92,500
100%
15.6%
Cost of material
$41,625
45%
Production cost
$13,875
15%
Fixed cost
$8,000
8.6%
Profit
$29,000
31.4%
An increase of 15.6% in sales is required to yield a profit of $29000, for a new level of sales of $92,500.
Current Situation
Sales
$80,000
100%
Cost of material
$36,000
45%
Production cost
$12,000
15%
Fixed cost
$8,000
10%
Profit
$24,000
30%
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.