Jannell Ericson reflected on both offers she had received in the past couple of days First, Artie Norman, a friend of Erickson's and the owner of a small company in carby Yakimi, Washington, had called to see if Erickson's printing compasy, Phantom Printing, could accommodate a special printing order met method Jack Wolfe, the owner of a local one-room printing operation in Ellensburg, Washington, called The Print Stop, had stopped by to see if Phantom Printing could use some help printing color brochures over the set few months Company Background Erickson's company, Phantom Printing printed cable highquality color brochures in its facility located in Ellensburg, Washington. It primarily served the businesses in the Chelan, Kinnitas and Yakima Counties in Central Washington Mehly production in its Ellensburg facility ranged from 130,000 to 150.000 brochures per month. Full capacity was 150.000 brochures per month and brochures are an in batches of 100 capacay wa 1.500 batches per month). Jannell Erickson owned and managed the company. She employed one sales representative and one printing press operater, although she frequently relied on temporary labor to help in the printing process as needed to accommodate any changes in printing volume Jannell felt that many of her costs were fired, but that some con varied with the member of batches she printed and sold. Exhibit contains information related to Phantom's monthly operating costs for the last three months The company typically priced its printing services average of 20 per 100 brochures printed. Historically, Erickson had encountered linle variation in pricing from job to job. although occasionally, special pricing situations did She wondered how she should handle those special situations She didn't have a mile of how she could apply, but she wished she could find one The Special Order In his phone call. Artie Norman indicated that he needed a special job printed next month. He needed 25.000 brochures related to a new product for stribution three trade shows he was attending. When Jannellated Artie the usual price of S20 per 100 brochures, Artie sighed "anell, I know that Phantom Printing does a high quality job, but I'm short on funds right now because I spent so much on getting this ses product up and running. I can't go any higher than S13 per 100 brochures on this job. I'm sure the beaches won't look as nice, but that's all I've got to spend." Janneill was enthed about the potential business, but when she inquired about whether Artie would have future printing needs that Phantom could help with Antie expressed doubt. "We just don't do much of this type of stuff. This is the first material we've had printed like this in years, and we're only doing it because we're trying to get this new product of the ground. I suspect this will be the last for a long while Jannell knew she didn't have the capacity at the moment to handle the special eder. And, $13 per 100 brochures wounded low, Jannell replied. Let me look into this. I'm not sure we can do it for 513, but I'll be glad to think about it. I'll give you a callback in a couple of days Junnell realized that with this order she wouldn't have to pay her sales representate the typical commission of 1.25 per 100 brochures, but that 51.25 saving begin to make up for the lower price The Outsourcing Opportunity Jack Wolierned a local one-room printing operation called The Print Stop Has largest customer has just informed him that it was going out of business and would no longer need lis printing services. Most of The Print Stop customen were small companies needing basic printing services in small quantities. But a few of his customers, including his largest customer used his services for both basic printing and more elaborate work, including color brochures Jack had a long-standing relationship with the customer's owner and had purchased the small printing press he used for color brochures partially to serve this customer's needs. He wasn't sure how he was going to get enough business to make up for this low, especially since he primarily was known for his basic printing services rather than printing cabate brochures Jack decided to stop by to talk with Jannell Erickson, owner of Phantom Printing, "I've had some bad luck. My largest customerjast informed me that it is closing its doors. I've been doing their color printing work for several years, and the closing leaves me with a lot of idle capacity. I wonder if you have any extra brochure printing I can help with. I'd be happy to do it really cheaply, just to keep my press going. I would go as low as 510 per 100 brochures. And I could handle 30,000 brochures for your next month Jannell thought that $10 per 100 brochures sounded like a good deal. She wasn't sure that even she could print that cheaply. And she knew that The Print Stap did a good job. She has used them before. They did high-quality work, and were dependable Required: 1. Consider the special order from Artic Norman a. Phantom Printing is operating at around full capacity: 150,000 brochures (1,500 batches) Should Erickson accept the special order? b. Assume that monthly printing capacity is 200,000 brochures, current monthly production is 150.000 brochures, and operating costs at the 150,000 level areas presented in case Exhibit 1. Also assume that this order would not affect any of Phantom's current business with its regular customers. Should Erickson accept the special order 2. Consider the outsourcing opportunity form Jack Wolfe of The Print Stop. Should Phantom outsource 30,000 brochures to The Print Stop 3. Would it be profitable for Phantom Printing to print the special order for Artie Norman, while outsourcing 25,000 brochures to The Print Stop! 4. Make a final recommendation to Janelle Erickson as to what she should do related to these two offers, Include in your recommendation any other qualitative) factors that should be considered and how those factors may influence the recommendation Exhibit Phantom Printing Monthly Summary of Operating costs Ostober 147.500 1,475 November 135,000 1 350 December 150,000 1.500 Volume brochures) Volume (batches of 100 brochures) Manufacturing costs Direct material Direct labor Manufacturing overhead Total Manufacturing costs $ 5.8955 5,560 5.400$ 5.363 6200 16,9635 6,000 5.625 5,500 18,125 $ 17.930 $ Nonmanufacturing costs: Sales costs Corporate costs Total nonmanufacturing costs 3,7505 3.750 7.500 5 3.5885 3.750 7,3385 3,775 3.250 7.525 $ Total Costs 5 25.430 24 300 5 25,650 Jannell Ericson reflected on both offers she had received in the past couple of days First, Artie Norman, a friend of Erickson's and the owner of a small company in carby Yakimi, Washington, had called to see if Erickson's printing compasy, Phantom Printing, could accommodate a special printing order met method Jack Wolfe, the owner of a local one-room printing operation in Ellensburg, Washington, called The Print Stop, had stopped by to see if Phantom Printing could use some help printing color brochures over the set few months Company Background Erickson's company, Phantom Printing printed cable highquality color brochures in its facility located in Ellensburg, Washington. It primarily served the businesses in the Chelan, Kinnitas and Yakima Counties in Central Washington Mehly production in its Ellensburg facility ranged from 130,000 to 150.000 brochures per month. Full capacity was 150.000 brochures per month and brochures are an in batches of 100 capacay wa 1.500 batches per month). Jannell Erickson owned and managed the company. She employed one sales representative and one printing press operater, although she frequently relied on temporary labor to help in the printing process as needed to accommodate any changes in printing volume Jannell felt that many of her costs were fired, but that some con varied with the member of batches she printed and sold. Exhibit contains information related to Phantom's monthly operating costs for the last three months The company typically priced its printing services average of 20 per 100 brochures printed. Historically, Erickson had encountered linle variation in pricing from job to job. although occasionally, special pricing situations did She wondered how she should handle those special situations She didn't have a mile of how she could apply, but she wished she could find one The Special Order In his phone call. Artie Norman indicated that he needed a special job printed next month. He needed 25.000 brochures related to a new product for stribution three trade shows he was attending. When Jannellated Artie the usual price of S20 per 100 brochures, Artie sighed "anell, I know that Phantom Printing does a high quality job, but I'm short on funds right now because I spent so much on getting this ses product up and running. I can't go any higher than S13 per 100 brochures on this job. I'm sure the beaches won't look as nice, but that's all I've got to spend." Janneill was enthed about the potential business, but when she inquired about whether Artie would have future printing needs that Phantom could help with Antie expressed doubt. "We just don't do much of this type of stuff. This is the first material we've had printed like this in years, and we're only doing it because we're trying to get this new product of the ground. I suspect this will be the last for a long while Jannell knew she didn't have the capacity at the moment to handle the special eder. And, $13 per 100 brochures wounded low, Jannell replied. Let me look into this. I'm not sure we can do it for 513, but I'll be glad to think about it. I'll give you a callback in a couple of days Junnell realized that with this order she wouldn't have to pay her sales representate the typical commission of 1.25 per 100 brochures, but that 51.25 saving begin to make up for the lower price The Outsourcing Opportunity Jack Wolierned a local one-room printing operation called The Print Stop Has largest customer has just informed him that it was going out of business and would no longer need lis printing services. Most of The Print Stop customen were small companies needing basic printing services in small quantities. But a few of his customers, including his largest customer used his services for both basic printing and more elaborate work, including color brochures Jack had a long-standing relationship with the customer's owner and had purchased the small printing press he used for color brochures partially to serve this customer's needs. He wasn't sure how he was going to get enough business to make up for this low, especially since he primarily was known for his basic printing services rather than printing cabate brochures Jack decided to stop by to talk with Jannell Erickson, owner of Phantom Printing, "I've had some bad luck. My largest customerjast informed me that it is closing its doors. I've been doing their color printing work for several years, and the closing leaves me with a lot of idle capacity. I wonder if you have any extra brochure printing I can help with. I'd be happy to do it really cheaply, just to keep my press going. I would go as low as 510 per 100 brochures. And I could handle 30,000 brochures for your next month Jannell thought that $10 per 100 brochures sounded like a good deal. She wasn't sure that even she could print that cheaply. And she knew that The Print Stap did a good job. She has used them before. They did high-quality work, and were dependable Required: 1. Consider the special order from Artic Norman a. Phantom Printing is operating at around full capacity: 150,000 brochures (1,500 batches) Should Erickson accept the special order? b. Assume that monthly printing capacity is 200,000 brochures, current monthly production is 150.000 brochures, and operating costs at the 150,000 level areas presented in case Exhibit 1. Also assume that this order would not affect any of Phantom's current business with its regular customers. Should Erickson accept the special order 2. Consider the outsourcing opportunity form Jack Wolfe of The Print Stop. Should Phantom outsource 30,000 brochures to The Print Stop 3. Would it be profitable for Phantom Printing to print the special order for Artie Norman, while outsourcing 25,000 brochures to The Print Stop! 4. Make a final recommendation to Janelle Erickson as to what she should do related to these two offers, Include in your recommendation any other qualitative) factors that should be considered and how those factors may influence the recommendation Exhibit Phantom Printing Monthly Summary of Operating costs Ostober 147.500 1,475 November 135,000 1 350 December 150,000 1.500 Volume brochures) Volume (batches of 100 brochures) Manufacturing costs Direct material Direct labor Manufacturing overhead Total Manufacturing costs $ 5.8955 5,560 5.400$ 5.363 6200 16,9635 6,000 5.625 5,500 18,125 $ 17.930 $ Nonmanufacturing costs: Sales costs Corporate costs Total nonmanufacturing costs 3,7505 3.750 7.500 5 3.5885 3.750 7,3385 3,775 3.250 7.525 $ Total Costs 5 25.430 24 300 5 25,650