Reference no: EM133088068

Question - PT. Sultan Food sells food and a variety of snacks and cakes. The company has one restaurant locations and serve catering orders for offices. All this time The dishes are made by themselves using family recipes that have been passed down from generation to generation. Company already have regular customers from various companies to order snacks and cakes for events in the office. Recently the company received an offer from PT. Mantap Rasa for making a variety of snacks and cakes that are usually made by companies. Cost the average per unit to produce 10,000 units of snacks and cakes per month is as follows:

Raw Material Cost IDR 5,000

Labor Cost IDR 4,000

Variable Overhead Cost IDR 1,500

Fixed Overhead Cost (assuming a capacity of 10,000 units) Rp3,700

In the fixed overhead costs, there is a production manager salary cost of IDR 12,500,000 per month consisting of a basic salary of IDR 10,000,000 and job allowances IDR 2,500,000. In addition, there is an equipment depreciation expense of IDR 500,000 per month. If the company accepts the offer of PT. Mantap Rasa, then the company can focus developing a new menu in the form of healthy food and diet. Based on the analysis that has been.

If done, the new menu can provide a contribution margin of Rp. 15,000 per person servings and the company already has the prospect of receiving 1,000 servings per month. Equipment which is usually used to make snacks and cakes has a book value of IDR 28,000,000 at this time, and because it is no longer used will be sold. Now someone wants to buy the equipment at a price of Rp. 25,000,000. The production manager will be reassigned to other parts, and no longer receive the benefits of office.

PT. Rasa Mantap is able to buy 10,000 units of snacks and cakes per month according to needs.

Required -

1. Make your analysis to recommend whether PT. Great Taste it should be accepted or not!

2. What is the maximum price that can be offered to PT. Rasa Mantap when negotiating?

3. What strategic factors need to be considered in the decision?