Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $
ID: 375699 • Letter: K
Question
Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at
$31 comma 20031,200
(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 profit line to
$41 comma 20041,200
so he can obtain the bank's approval for the loan.
% of sales
Sales
260 comma 000260,000
100%
Cost of supply chain purchases
169 comma 000169,000
6565%
Other production costs
28 comma 60028,600
1111%
Fixed costs
31 comma 20031,200
1212%
Profit
31 comma 20031,200
1212%
a) What percentage improvement is needed in a supply chain strategy for profit to improve to
$41 comma 20041,200?
What is the cost of material with a
$41 comma 20041,200
profit?
A decrease of
nothing%
in supply-chain costs is required to yield a profit of
$41 comma 20041,200,
for a new cost of supply chain purchases of
$nothing.
(Enter your response for the percentage decrease to one decimal place and enter your response for the new supply chain cost as a wholenumber.)
% of sales
Sales
260 comma 000260,000
100%
Cost of supply chain purchases
169 comma 000169,000
6565%
Other production costs
28 comma 60028,600
1111%
Fixed costs
31 comma 20031,200
1212%
Profit
31 comma 20031,200
1212%
Problem 11.3 Question Help Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $31,200 (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 nevw equipment. Kamal would like to improve profit line to S41,200 so he can obtain the bank's approval for the loarn. Sales Cost of supply chain purchases Othar production costs Fixed costs Profit 260,000 169,000 28,600 31,200 31,200 % of sales 100% 65% 1156 12% 12% a) What parcentage improvement is needad in a supply chain strategy for profit to improve to $41,200? What is the cost of matarial with a 41,200 profit? % n supp y chain costs is required to yield a pro o S4 200, chain purchases o S one dec mal sce and en er your esponse or A decrease ot number.) or a new cost o su p enter your epo se o ne per entege decreea e e new 3 pp y chem cost as a wholeExplanation / Answer
Present profit = $31,200
Required profit = $41,200
Assuming that the production cost and fixed cost remain the same as before, the Improvement in profit = Reduction in supply chain cost = $41,200 - $31,200 = $10,000
% reduction = $10,000/ $169,000 = 5.92%
New cost of supply chain will be $159,000
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