Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $
ID: 392182 • Letter: K
Question
Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $26,000 (as shown in the statement below) dash 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 $36,000 so he can obtain the bank's approval for the loan. % of sales Sales 260,000 100% Cost of supply chain purchases 187,200 72% Other production costs 20,800 8% Fixed costs 26,000 10% Profit 26,000 10% a) What percentage improvement is needed in a supply chain strategy for profit to improve to $36,000? What is the cost of material with a $36,000 profit? A new cost of supply chain purchases is $ nothing. (Enter your response rounded to the nearest dollar.)
Explanation / Answer
a)
For Profit to increase from 26000 to 36000 supply chain cost should decrease by 10000 so percentage decrease = 10,000/187,200
= 5.34%
b)
COst of material with 36000 profit = 187,200-10,00
=177,200
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