$35.00 bus 630
To participate in the following discussions, go to this week's Discussion link in the left navigation.
- Make or Buy
Han Products manufactures 30,000 units of part S-6 each year for use on its production line.† At this level of activity, the cost per unit for part S-6 is as follows:
Variable manufacturing overhead
Fixed manufacturing overhead
Total cost per part
An outside supplier has offered to sell 30,000 units of part S-6 each year to Han Products for $21 per part.† If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $80,000.† However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.† Prepare computations showing how much profits will increase or decrease if the outside supplierís offer is accepted.† Respond to at least two of your fellow studentsí postings.
- Net Present Value Analysis
Complete the following exercise, using this Excel†template, and respond to at least two of your fellow studentsí postings.. In eight years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan has determined the following:
- A building in which a car wash could be installed is available under an eight-year lease at a cost of $1,700 per month.
- Purchase and installation costs of equipment would total $200,000. In eight years the equipment could be sold for about 10% of its original cost.
- An investment of an additional $2,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After. eight years, this working capital would be released for investment elsewhere.
- Both a wash and a vacuum service would be offered with a wash costing $2.00 and the vacuum costing $1.00 per use.
- The only variable costs associated with the operation would be 20 cents per wash for water and 10 cents per use of the vacuum for electricity.
- In addition to rent, monthly costs of operation would be: cleaning, $450; insurance, $75; and maintenance, $500.
- Gross receipts from the wash would be about $1,350 per week. According to the experience of other car washes, 60% of the customers using the wash would also use the vacuum.
- Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash
receipts (gross cash receipts less cash disbursements) from its operation. (Do not include the cost of
the equipment, the working capital, or the salvage value in these computations.) (Ignore income taxes.)
- Would you advise Mr. Duncan to open the car wash? Show computations using the net present value method of investment analysis. Round all dollar figures to the nearest whole dollar. (Ignore income taxes.)†††††
To complete the following assignment, go to this week's Final Paper link in the left navigation.
A Final Project is due the last class session.† The Final Project will contribute 23% to the course grade.
Focus of the Final Project:
Submit a paper on one of the major topics listed below using the articles from the list of recommended articles in Course Material†as the basis for the paper and incorporating at least two other related articles of the studentís choice:
- Cost Management
- Supply Chain Management
- Cost Cutting
The paper must (a) identify the main issues in the chosen area, (b) contain and reference new learning that has occurred, (c) build upon class activities or incidents that facilitated learning and understanding, and (d) present specific current and/or future applications and relevance to the workplace. The emphasis of the paper should be on application of new learning.
Carefully review the†Grading Rubric†for the criteria that will be used to evaluate your assignment.
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