Case #1

Pricing Strategy Scenario You are working for a large manufacturing company and need to provide feedback on various pricing options based on information you have learned during your time in the organization. You have the below information to get started: 1. Using the four cost based pricing strategies, what would the expected per unit pricing to be in each case?

Cost-plus Method

Variable total cost = $23,750

Fixed total cost = $35,450

Expected production = 125 units

Mark-up percentage = 15%

Mark-up Pricing Method

Variable total cost = $23,750

Fixed total cost = $35,450

Expected production = 125 units

Margin dollars needed = $125 per unit

Break-even Pricing Method

Variable total cost = $23,750

Fixed total cost = $35,450

Expected production = 125 units

Desired profit = $50.00

Target-profit Pricing Method

Variable cost = $23,750

Fixed total cost = $35,450

Expected production = 125 units

Return on investment required = 10%

2. Which of the four cost based pricing strategies would be the best option for the organization, and why?

3. Describe and discuss three factors that can impact price, and the potential impact it may have on your decision in question 2.

Module 2 Cost Management Scenario Youve completed your look at possible pricing strategies but you also need to be prepared to discuss how you improve the profitability beyond setting appropriate prices. Cost management is a key piece of the overall puzzle, you also prepare the added feedback as below.

1. There are four main considerations of cost management in supply chain. Describe each of the four areas of cost management and include what actions a firm may be able to take to improve, or reduce, the cost in each category. Provide two examples of improvement for each cost category.

2. You have completed your cost management review, how would you implement possible changes in the areas youve described in question 1.

Module 3

Working Capital Scenario

Youve been asked to review a new project and need to look at the impact financing will have on the organization.

You need to finance $625,000 of working capital (current assets) and $125,000 of capital (fixed) assets. The short term financing rate is 5% and the long term financing rate is 6.5%.

Plan A you look at financing all of the working capital at 5% and the fixed assets at 6.5%. Plan B you can decide to finance only $350,000 of the working capital short term, the rest long term and the fixed assets at long term financing. 1. What would earnings be for each plan if earnings before interest and tax is $225,000 with a tax rate of 55%.

2. Which plan would you choose and why? (Hint: also consider risk on long versus short term financing). Module 4 Financial Forecasting Scenario Because of all the great work you did in preparing pricing and cost strategies, and the insight you have provided about the new project, the finance team has asked you to assist in developing pro forma financial statements.

You have been asked to use the sales forecast to provide a revenue and expense report to be used in creating a pro forma income statement. The information you have been provided is below: Sales Forecast (one year): Product A = 750 units at a sales price of $22.50 per unit. Product B = 450 units at a sales price of $33.75 per unit. Current production cost per unit of Product A is $11.25 and Product B is $17.50. Production cost is expected to increase by 15% in the coming year for all new inventory.

Beginning inventory of Product A is 125 units and Product B is 75 units. Desired ending inventory is 10%.

1. What is the sales revenue projection?

2. What is the total value of the beginning inventory?

3. How many units of each product are required to be produced to meet the sales forecast?

4. What are the total production costs of the new inventory?

5. Calculate the total value of the ending inventory?

Case #1 REMINDER: Show your work, use excel if you prefer. Submit answers in a Word document. Module 1 Pricing Strategy Scenario You are working for a large manufacturing company and need to provide feedback on various pricing options based on information you have learned during your time in the organization. You have the below information to get started:

1. Using the four cost based pricing strategies, what would the expected per unit pricing to be in each case? Cost-plus Method Variable total cost = $23,750 Fixed total cost = $35,450 Expected production = 125 units Mark-up percentage = 15% Mark-up Pricing Method Variable total cost = $23,750 Fixed total cost = $35,450 Expected production = 125 units Margin dollars needed = $125 per unit Break-even Pricing Method Variable total cost = $23,750 Fixed total cost = $35,450 Expected production = 125 units Desired profit = $50.00 Target-profit Pricing Method Variable cost = $23,750 Fixed total cost = $35,450 Expected production = 125 units Return on investment required = 10% 2. Which of the four cost based pricing strategies would be the best option for the organization, and why? 3. Describe and discuss three factors that can impact price, and the potential impact it may have on your decision in question 2.

Module 2 Cost Management Scenario

Youve completed your look at possible pricing strategies but you also need to be prepared to discuss how you improve the profitability beyond setting appropriate prices. Cost management is a key piece of the overall puzzle, you also prepare the added feedback as below.

1. There are four main considerations of cost management in supply chain. Describe each of the four areas of cost management and include what actions a firm may be able to take to improve, or reduce, the cost in each category. Provide two examples of improvement for each cost category.

2. You have completed your cost management review, how would you implement possible changes in the areas youve described in question 1.

Module 3 Working Capital Scenario

Youve been asked to review a new project and need to look at the impact financing will have on the organization. You need to finance $625,000 of working capital (current assets) and $125,000 of capital (fixed) assets. The short term financing rate is 5% and the long term financing rate is 6.5%. Plan A you look at financing all of the working capital at 5% and the fixed assets at 6.5%. Plan B you can decide to finance only $350,000 of the working capital short term, the rest long term and the fixed assets at long term financing.

1. What would earnings be for each plan if earnings before interest and tax is $225,000 with a tax rate of 55%.

2. Which plan would you choose and why? (Hint: also consider risk on long versus short term financing).

Module 4 Financial Forecasting Scenario

Because of all the great work you did in preparing pricing and cost strategies, and the insight you have provided about the new project, the finance team has asked you to assist in developing pro forma financial statements. You have been asked to use the sales forecast to provide a revenue and expense report to be used in creating a pro forma income statement. The information you have been provided is below:

Sales Forecast (one year): Product A = 750 units at a sales price of $22.50 per unit.

Product B = 450 units at a sales price of $33.75 per unit.

Current production cost per unit of Product A is $11.25 and Product B is $17.50.

Production cost is expected to increase by 15% in the coming year for all new inventory.

Beginning inventory of Product A is 125 units and Product B is 75 units.

Desired ending inventory is 10%.

1. What is the sales revenue projection?

2. What is the total value of the beginning inventory?

3. How many units of each product are required to be produced to meet the sales forecast?

4. What are the total production costs of the new inventory?

5. Calculate the total value of the ending inventory?