QUESTION #1 Cost Plus or Should Cost Analysis You want to evaluate if one of JDM's Taiwanese suppliers is cost competitive. You ask Frank for a cost breakdown for JDM's mid-range coffee maker. JDM's mid-range coffee maker does not have all of the features that the Family Man offers, but it is similar in most functions. Frank does not have a full cost breakdown, but states that the direct material cost is $5, direct labor cost is $1 (15 minutes at $4 per hour), and the final price is $11.25 each. Primo Caf now uses a Vietnamese supplier for the Family Man for $12 each. You do have a cost breakdown for the Family Man, which is provided in the excel file. Apply the cost plus (should cost) framework presented in class in week 7 to complete the questions below. Complete all calculations in the excel file provided, that you will upload with your exam. 1. What would be the estimated price from the Vietnamese supplier for JDM's mid-range coffee maker? Assume that the direct material cost would be the same and that the number of minutes of direct labor would be the same as Frank's information from the Taiwanese supplier. Also, assume that the Vietnamese supplier's allocations for Overhead, SG&A and Profit, and Direct Labor cost/hour for Family Man will be the same if they manufactured JDM's mid-range coffee maker. 2. You ask Frank for the sales volume for JDM's mid-range product. He tells you that JDM is selling approximately 35,000 units per month. Given just this information, what is the estimated annual impact (cost savings or cost increase) if JDM used the Vietnamese supplier instead of the Taiwanese supplier for their mid-range coffee maker? 3. What other information would you like to know before a final discussion with Elise? A B D E F G H | 1 2 Vietnamese price for 3 Family Man Vietnamese price - JDM's Mid-range 4 DM $6.395 DM 5 DL $1.00 (20 minutes at $3 per hour) DL 6 OH $1.30 130% OH 7 COGS $8.70 COGS 8 SG&A $1.74 20% SG&A 9 TPC $10.43 TPC 10 Profit $1.57 15% 11 Sell Price $12.00 Profit Sell Price 12 13 14 Taiwanese Supplier - JDM's Mid-range 15 16 DM 17 DL 18 OH 19 COGS 20 SG&A $5.00 $1.00 (15 minutes at $4 per hour) 21 TPC 22 Profit 23 Sell Price $11.25 24