Essay Problem 3 - Student - Saved References Review View Help Open in Desktop App Tell me what you want to 11 ' ... Evvv NAIVIE NOTE: Read the case below and calculate, explain, and write up your conclusion for your choice. There are 6 questions to be answered. An example of a side by side comparison follows question 6 for demonstrative purposes - you do not need to respond to the example. Raider Red Company owns numerous facilities and production plants. The company routinely evaluates proposals as to whether they will improve operations. They are currently reviewing the four following proposals. One involves the suggestion to close the unprofitable store in the Depot District. Another is to outsource the acquisition of tortillas, rather than making them. Another proposal is to sell packaged beef to a non-competing restaurant chain under a private label. The last proposal is the throw out items with an old logo. You are the controller for Raider Red Company and are to analyze staff reports for each proposal. For each proposal, perform a side by side comparison. On one side show the results of accepting the recommendation and on the other side show the rejection of the recommendation. (Hint: Spreadsheets would be very useful for the analysis). Write up your approach to your analysis and your conclusion (your decision and why) for each scenario. Show all your work. Summary for each proposal are as follows: Essay Problem 3 - Student - Saved References Review View Help Open in Desktop App Tell me what you want to do v 11 A " B 1 U Or Av Ao Example side by side comparison: Pure Company makes and sells bedding. They have been producing and selling 500,000 units per year. Each unit sells for $600, and there are no variable selling, general, or administrative costs. The company has been approached by a supplier who wishes to provide a component for $90 per unit. Total annual manufacturing costs, including is as follows. Direct materials $50,000,000 Direct labor 800,000 Variable factory OH16,000,000 Fixed factory OH 35,000,000 If Pure outsources the component, it is expected that direct materials will be reduced by 20%, direct labor by 30%, and variable factory OH by 25%. There will be no reduction in fixed factory OH. 1. Should Pure outsource the component? DM OL Var Factory OH Internal $50,000,000 80,000,000 1 16.000.000 Outsource $40,000,000 56,000,000 12.000.000 15 & 8 9 Essay Problem 3 - Student - Saved References Review View Help Open in Desktop App Tell me what you want to do V 11 ' ' U D A A If Pure outsources the component, it is expected that direct materials will be reduced by 20%, direct labor by 30%, and variable factory OH by 25%. There will be no reduction in fixed factory OH. 1. Should Pure outsource the component? DM DL Var. Factory OH Fixed Factory OH Outsourced component (500,000 X $90) Total cost of each option Internal $50,000,000 80,000,000 16,000,000 35,000,000 Outsource $40,000,000 56,000,000 12,000,000 35,000,000 181,000,000 45,000,000 188,000,000 It appears that it will cost more to outsource. Based on this quantitative analysis the company would not outsource the component. (Here is a side by side comparison of the options. For your essay, you would tell why you made this analysis, you would describe how you arrived at the outsource amounts, and you would explain why you would not outsource) TOO O a 15 5 6 8 Essay Problem 3 - Student - Saved References Review View Help Open in Desktop App Tell me what you want to 11 ' ... Evvv NAIVIE NOTE: Read the case below and calculate, explain, and write up your conclusion for your choice. There are 6 questions to be answered. An example of a side by side comparison follows question 6 for demonstrative purposes - you do not need to respond to the example. Raider Red Company owns numerous facilities and production plants. The company routinely evaluates proposals as to whether they will improve operations. They are currently reviewing the four following proposals. One involves the suggestion to close the unprofitable store in the Depot District. Another is to outsource the acquisition of tortillas, rather than making them. Another proposal is to sell packaged beef to a non-competing restaurant chain under a private label. The last proposal is the throw out items with an old logo. You are the controller for Raider Red Company and are to analyze staff reports for each proposal. For each proposal, perform a side by side comparison. On one side show the results of accepting the recommendation and on the other side show the rejection of the recommendation. (Hint: Spreadsheets would be very useful for the analysis). Write up your approach to your analysis and your conclusion (your decision and why) for each scenario. Show all your work. Summary for each proposal are as follows: Essay Problem 3 - Student - Saved References Review View Help Open in Desktop App Tell me what you want to do v 11 A " B 1 U Or Av Ao Example side by side comparison: Pure Company makes and sells bedding. They have been producing and selling 500,000 units per year. Each unit sells for $600, and there are no variable selling, general, or administrative costs. The company has been approached by a supplier who wishes to provide a component for $90 per unit. Total annual manufacturing costs, including is as follows. Direct materials $50,000,000 Direct labor 800,000 Variable factory OH16,000,000 Fixed factory OH 35,000,000 If Pure outsources the component, it is expected that direct materials will be reduced by 20%, direct labor by 30%, and variable factory OH by 25%. There will be no reduction in fixed factory OH. 1. Should Pure outsource the component? DM OL Var Factory OH Internal $50,000,000 80,000,000 1 16.000.000 Outsource $40,000,000 56,000,000 12.000.000 15 & 8 9 Essay Problem 3 - Student - Saved References Review View Help Open in Desktop App Tell me what you want to do V 11 ' ' U D A A If Pure outsources the component, it is expected that direct materials will be reduced by 20%, direct labor by 30%, and variable factory OH by 25%. There will be no reduction in fixed factory OH. 1. Should Pure outsource the component? DM DL Var. Factory OH Fixed Factory OH Outsourced component (500,000 X $90) Total cost of each option Internal $50,000,000 80,000,000 16,000,000 35,000,000 Outsource $40,000,000 56,000,000 12,000,000 35,000,000 181,000,000 45,000,000 188,000,000 It appears that it will cost more to outsource. Based on this quantitative analysis the company would not outsource the component. (Here is a side by side comparison of the options. For your essay, you would tell why you made this analysis, you would describe how you arrived at the outsource amounts, and you would explain why you would not outsource) TOO O a 15 5 6 8