A product that is made to order.

A corporation manufactured a made-to-order product for a customer at a cost of $50,000 that was supposed to be sold for $120,000 to the customer.

The client has now declared bankruptcy.

The corporation can turn the device into a different version, which it believes will sell for $85,000.

The following would be required for conversion:

(1)1,000 kg of A material The company now has 2,500 kilograms in stock, which was purchased for $2.00 a kilogram last month, while the current purchase price has risen to $2.15. Material A is frequently used in the rest of the company's products.

(2)Material B, 2,000 kg The company now has 600 kilograms in stock, which was purchased for $3.00 a kilogram last month, while the current purchase price is $3.50. The substance has no further use and has a scrap value of $1.00 per kilogram.

(3)Skilled labor for 4,000 hours.

Skilled labor is compensated on a weekly basis, and there is now enough spare capacity to cover half of the required hours. Overtime, which would be paid at $12 per hour, would be used to make up the remaining hours.

(4) Semi-skilled labor for 3,000 hours. Semi-skilled labor is paid $6 per hour, however it is now unavailable due to other projects. Staff will not work overtime due to union limitations, and there is no additional labor available at such short notice. As a result, moving employees from other productions is the only way to achieve the requisite hours. For each hour spent on this other output, a contribution of $4 is generated (income of $25, material cost of $15, and labor cost of $6).

(5)A machine purchased four years ago for $30,000 The machine is currently in use elsewhere in the company, with a present value of $20,000 and a scrap value of $12,000. After the conversion project, an equivalent replacement equipment might be acquired for $15,000 and would have no residual value.

(6)The project will be held in a facility that is now unoccupied. The factory is being depreciated, with a total depreciation of $10,000 over the length of the project.

(7)A proportion of central overheads will be allocated to the conversion project at a rate of $4 every skilled labor hour done.

Obligation

Calculate whether or not the business should convert the product.

(25 points)

B Objectives and non-profit status

(a)Explain and comment on the difficulties of assessing performance in a non-profit organization.

(10 points)

(b)Discuss a public-sector organization's goals and how performance is monitored and managed.

(10 points)

(c)Explain briefly the significance of three indicators that can be used to evaluate performance in public sector education services.

(5 points)

(Total score: 25)