How many units would he need to sell to break even

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Reference no: EM132169929

Purchasing and Supply Management

Homework - Chapters 11 & 12 - 100 points

1) Your supplier is quoting you a price on a new part that he would like to produce for you. If the supplier's desired rate of return is 15 percent, the required investment $150,000, the estimated sales quantity 5000 units and the unit cost $80, what would be the selling price if he used the Rate-of-Return pricing model?

2) A supplier has a product that he is thinking of selling for $10.00 each and he thinks that he can sell 1,000 of them. He anticipates that the fixed costs are going to be $7,700 and the total variable costs are $4.50/unit.

a. What would be his profit if he was able to sell all 1000 units?

b. How many units would he need to sell to break even?

3) A small manufacturing company has been purchasing a casting in its final machined form. The company is now considering whether or not it should buy the rough casting and perform its own machining. The purchase price of the machined part is $4.25 per unit.

The price of the rough casting is $1.30 per unit, and it requires $1.80 per unit in labor if the company does its own machining. In addition if the company does its own machining the fixed costs will increase by $4800 per year. At what annual volume (number of units) is the total cost to purchase equal to the total cost to make?

4) In June 2012 a buyer paid $50.00/unit for an item. By September 2012 the buyer was told that the new price was $52.50. During the same period the producer price index for a comparable type of material had increased from $125.40 to $126.80. Determine if the new price charged by the supplier was reasonable.

5) A buyer has placed an order with a supplier for 50 pieces of a new item at a per-unit price of $180 and has accumulated the following cost data:

Material $70

Direct labor $ 40 (5 hours at $8 per hour)

Overhead $ 40 (100% of direct labor)

Total costs $150

Profit (20%) $ 30 (20% of total costs)

Total per unit $180

The buyer now wants to place an order for an additional 350 pieces. Create an EXCEL spreadsheet that can provide answers to the following questions:

What is the average labor hours for the entire combined order of 400 pieces assuming a 90% learning curve

Calculate the hours required for the total combined order 400 units

For the new order of 350 pieces calculate

The labor hours required to complete this order

The total labor cost

The per unit labor cost

The expected per unit price

Reference no: EM132169929

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