Illustrate what should you do continue to produce in-house

Assignment Help Business Management

Reference no: EM1385095

Q. One of your Taiwanese suppliers has bid on a new line of moulded plastic parts which is currently being assembled at your plant. The supplier has bid $0.10 per part, given a forecasted demand of 200,000 parts in year 1; 300,000 in year 2; and 500,000 in year 3. Shipping and handling of the parts from the supplier's factory is estimated at $0.01 per unit. Additional inventory handling charges should amount to $0.005 per unit. Finally, administrative costs are estimated at $20 per month.

Although your plant is able to continue producing the part, the plant would need to invest in another molding machine which would cost $10,000. Direct materials can be purchased for $0.05 per unit. Direct labour is estimated at $0.03 per unit plus 50% benefits. Up-front engineering and design costs will amount to $30,000. Finally, management has insisted which overhead be allocated if the parts are made in-house at a rate of 100% of direct labour cost. The industry uses a cost of capital of 15% per year.

Illustrate what should you do, continue to produce in-house or accept the bid from your Taiwanese supplier?

Reference no: EM1385095

Questions Cloud

Probability of the functions of car battery : The probability that a new car battery functions for over 10,000 miles is .8, the probability that it functions for over 20,000 miles is .4, and the probability that it functions over 30,000 miles is .1. If a new battery is still working after 10,..

Explain why is the capital expenditure budgeting important : Explain why is the capital expenditure budgeting process important? Illustrate what concepts should be considered when evaluating a capital expenditure.

Information of social stratification : Sociological study of stratification is generally conducted at macro level and draws most heavily on the functionalist and conflict perspectives.

Developed and implemented to increase revenues : QA best practices that can be developed and implemented to increase revenues and/or to decrease costs. Please provide at least three mathematical examples supporting your recommendations.

Illustrate what should you do continue to produce in-house : Finally, management has insisted which overhead be allocated if the parts are made in-house at a rate of 100% of direct labour cost. The industry uses a cost of capital of 15% per year. Illustrate what should you do, continue to produce in-house o..

Write down the force exerted by the spring : In one dimension, it is obvious that the force obeying Hook's law is conservative. Consider instead a spring that obeys Hook's law and has one end fixed at origin.

Government global interventions : How active should the U.S. government be in addressing violations of human rights in other countries? At what point, if any, does concern for human rights turn into ethnocentrism

Determine frequency of the dominant allele : In a small population of snapdragons experiencing incomplete dominance, 30 percent express the homozygous dominant phenotype of red flowers, 50 percent have the heterozygous phenotype

A contractor departed from the specifications at a number : A contractor departed from the specifications at a number of points in a contract to build a house. The cost to put the house in the condition called for by the contractor was approximately $14,000.

User Account

All Pages