Question
BabyCo is a brand that designs and manufactures baby clothing for the U.S. market. They are planning on having their Amy Line of little girl
BabyCo is a brand that designs and manufactures baby clothing for the U.S. market. They are planning on having their Amy Line of little girl onesies manufactured in a cut & sew factory that they own in Chittagong, Bangladesh. BabyCo is planning on sourcing the fabric used to make the onesies from a textile manufacturer in Mumbai, India. All of the onesies will be sent to Los Angeles, where BabyCo has a large DC. Each onesie requires 0.84 yards of fabric. The textile manufacturer in Mumbai, India charges BabyCo $0.99 per yard for the fabric used to make the onesies. The finance charge on this fabric purchase is 2.6%. Based on her previous experience of manufacturing onesies, the production manager of the cut & sew factory in Bangladesh believes that onesies in the Amy Line will require 9 SAMS. Indirect factory labor is 34% of the direct sewing cost. The average monthly wage for sewing workers in the cut & sew factory is 8458 Bangladeshi Taka (BDT). Each sewing worker works 47 hours per week and 45 weeks per year. The current conversion rate is one U.S. dollar equals 80.64 BDT. Each onesie requires 1.47 yards of thread to sew, and consists of 4 snaps and requires 1 labels. The cost of a yard of thread, one snap, and one label is $0.03, $0.08, and $0.02, respectively. The current market rate to ship a 40 foot container of fabric from Mumbai, India to Chittagong, Bangladesh to is between $1252 and $1588. The current market rate to ship a 40 foot container of garment from Chittagong, Bangladesh to Los Angeles is between $3210 and $3531. Based on past experience, 37160 yards of fabric can fit in a 40 foot container, and 43178 onesies can fit in a 40 foot container. BabyCo's usual overhead as a percentage of TMC is 36%. The U.S. imposes an ad valorem tariff on the type of onesie produced for the Amy line, and assume that the tariff imposed for importing them from Bangladesh is 12.3%. The typical IMU for retailers who carry BabyCos Amy line of onesies is 49.8%.
a. What is the average fabric freight in dollars per onesie?
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