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3 As the CEO of Hakoopian clothing company you want to decide whether to manufacture a particular product or outsource its production. Your business analysis
3 As the CEO of Hakoopian clothing company you want to decide whether to manufacture a particular product or outsource its production. Your business analysis team develops a spreadsheet model and uses Excel's What-If analysis to analyze "Savings due to Outsourcing" based on different scenarios. The results below are provided to you as the CEO. 1 Parameters 2 Outsourcing Cost per unit 4.50 3 Savings due to outsourcing per prod. volume Prod.Vol 514,500.00 Savings due to outsourcing per prod, volume and outsource cost per unit $ 14,500.00 $ 4.20 $ 4.35 3 4.50 $ 4.65 $ 4.30 4 Fixed Cost $ 25,000.00 10000 $21,500 5 Material cost per unit $ 2.15 20000 $18,000 6 Labor cost per unit $ 2.00 30000 $14,500 40000 $11,000 Model 50000 $7,500 10000 $24,500 20000 $24,000 30000 $23,500 40000 $23,000 10000 $11,000 9 Production Volume 30000 60000 $4,000 60000 10 70000 5500 70000 11 Total Outsource Cost 12 $ 135,000.00 80000 (53.000) 80000 $23,000 $21,000 $19,000 $14,500 $17,000 $22,500 $15,000 $7,500 $13,000 $22,000 $4,000 $11,000 $21.500 $500 $10,000) (530,500) $21,000 $9,000 ($3,000) ($15,000) 1527,000) $21,500 $20,000 $18,000 $18,500 $15,000 $12,000 $10,000 $5,500 $5,000 ($1,000) 50 155,000) ($14,000) (57,500) 13 Total Fixed Cost $ 25,000.00 90000 100000 54500 $10,000 14 Total Material Cost $ 64,500.00 15 Total Labor Cost $60,000.00 16 Total Cost $ 149,500.00 17 18 Savings due to outsourcing $14,500.00 19 The outsourcing cost per unit is $4.50 The amounts in parentheses are negative (loss) Left column represent production volume.. Right column represent "Savings due to outsourcing (56,500) ($20,000) (533.500) 510 000 ($25.000 (540.000 The amounts in parantheses are negative o The first Deft-most) column represents the production volume The top row amounts represent "Outsourcing Cost per unit. The amount in each cell represent "Savings due to outsourcing Assuming that you outsource the production of 50,000 units and the company to which you outsource charges you $4.50 per unit, based on the results above, how much will be the savings (or loss) due to outsourcing? Note: Do not use the $ sign in your answer. For example, if there is a saving of $99, the answer is 99 Use a negative sign before the amount to show that it is a loss. For example, if there is a loss of $99, the answer is -99. If there is a saving of $99, then the answer is 99 90000 $20,500 $7,000 100000 $20,000 $5,000
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