Question
You now own a manufacturing firm and your firm makes 6 products. Each product has the following cost components: Material, Labor, and Marketing. In addition,
You now own a manufacturing firm and your firm makes 6 products. Each product has the following cost components: Material, Labor, and Marketing. In addition, there is a fixed cost for the firm.
Cost of item in production units
Production units | BA | AB | XC | RC | WA | RT |
Material Units | 2 | 2 | 1 | 1 | 3 | 1 |
Labor units | 1 | 1 | 1 | 2 | 2 | 1 |
Marketing | 1 | 1 | 1 | 2 | 2 | 1 |
Production units cost per unit |
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|
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Material | $7 | 5 | 4 | 5 | 6 | 6 |
Labor | $5 | $4 | $5 | $6 | $5 | $5 |
Marketing | $3 | $2 | $2 | $2 | $4 | $2 |
Retail Price | 40 | 35 | 25 | 28 | 58 | 31 |
Quantity | 500 | 750 | 650 | 900 | 250 | 600 |
Fixed cost: $12,000
Use scenario manager to conduct the following stress tests by determining the effect of the following scenarios upon net profit:
#1
Increase retail price, material cost, marketing and labor cost by 12%.
#2
Increase retail price by 5%, increase labor cost by 7%, increase marketing cost by 5% and hold material cost static.
#3
Decrease retail price by 5%, increase labor cost by 5%, decrease marketing cost by 5% and increase material cost by 5%, increase fixed cost by $1,000
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