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The cost associated with producing, distributing and selling a domestically produced automotive component can be summarized as follows: Cost Type Material cost Manufacturing and Labor
The cost associated with producing, distributing and selling a domestically produced automotive component can be summarized as follows: Cost Type Material cost Manufacturing and Labor Overhead Transportation Sales Profit Cost per Unit, $ 30 15 10 Varies by shipment size 10 7 Transportation costs vary as follows. If the purchase (shipping) quantity is 1000 units or less, the transportation cost is $10 per unit. For more than 1000 units and less or equal than 5000 units, the transportation cost is $7 per unit. For more than 5000 Units, the transportation cost is $5 per unit. a. Construct a price schedule, assuming the vendor would like to pass all transportation economies on to the customer (10 points) b. In addition to transportation savings, assume the vendor realizes an additional discount on Material cost of 5% when producing between 1000 units and less or equal than 2000 units and 10% of the material cost when producing more than 2000 units. He decides to pass all transportation savings + 1/2 material savings to the customer. Construct a price schedule. (15 points)
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