U D E F G H 2 Industrial Grinders 3 4 Duning the term, we had a case study, Industrial Grinders, which focused on Sunk and Opportunity Costs. 5 Please refer to the table below, which comes from data in the Industrial Grinders case Industrial Grinders 100 Steel Rings Competitor 100 Industrial Grinders 100 (Unfinished or 8 Plastic Rings Steel Rings (Finished) Specialized Steel) 9 Selling Price $ 320.40 $ 320.40 10 11 Costs 12 Direct Material $ 4.20 $ 76.65 13 Direct Labor 15.60 46.80 14 Overhead 15 Departmental 31.20 93.60 16 Administrative 15.60 46.80 17 Total Manufacturing Cos $ 66.60 $ 263.85 18 19 Regarding the Overhead costs, these are allocated based on Direct Labor, 20 The riable Overhead costs are 80% of the Direct Labor amount and relate to the benefits 21 for the labor force. 22 23 As you recall from the case, Industrial Grinders has the opportunity to hire the German Labor Force 24 at a rate of 70% of the normal rate. What would be the RELEVANT costs for Decision-Making 25 to produce the UNFINISHED (or Specialized Steel) to FINISHED steel? Please indicate your answers in the YELLOW boxes 26 above 27 28 Also, what PRICE POINT would the customer expect to see for the Steel Rings given that the Competitors Plastic Rings 29 last FOUR times as long? Please indicate in the YELLOW BOX in Cell E9. 30 31 Lastly, briefly comment on whether it would be cheaper to produce the Plastic Rings or to hire the German bor from 32 RELEVANT COST perspective. No more than two sentences are required. 33 34 35 36 37 38 39 B D F G H 1 2 Industrial Grinders 3 4 During the tem, we had a case study, Industrial Grinders, which focused on Sunk and Opportunity Costs. 5 6 Please refer to the table below, which comes from data in the Industrial Grinders case 7 Industrial Grinders 100 Steel Rings Competitor 100 Industrial Grinders 100 (Unfinished or 8 Plastic Rings Steel Rings (Finished) Specialized Steel) 9 Selling Price $ 320.40 $ 320.40 10 11 Costs 12 Direct Material $ 4.20 S 76.65 13 Direct Labor 15.60 46.80 14 Overhead 15 Departmental 31.20 93.60 16 Administrative 15.60 46.80 -17 Total Manufacturing Cos $ 66.60 $ 263.85 18 19 Regarding the Overhead costs, these are allocated based on Direct Labor, 20 The Variable Overhead costs are 80% of the Direct Labor amount, and relate to the benefits 21 for the labor force 22 23 As you recall from the case, Industrial Grinders has the opportunity to hire the Geman Labor Force 24 at a rate of 70% of the nomal rate. What would be the RELEVANT costs for Decision-Making -25 to produce the UNFINISHED (or Specialized Steel) to FINISHED steel? Please indicate your answers in the YELLOW boxes 26 above 27 28 Also, what PRICE POINT would the customer expect to see for the Steel Rings given that the Competitors Plastic Rings 29 last FOUR times as long? Please indicate in the YELLOW BOX in Cell E9. 30 31 Lastly, briefly comment on whether it would be cheaper to produce the Plastic Rings or to hire the German Labor from 32 RELEVANT COST perspective. No more than two sentences are required. 33 34 35 36 37
