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b) What percentage improvement is needed in a sales strategy for profit to improve to $40,800? What must sales be for profit to improve to $40,800? An increase of% in sales is required to yield a profit of $40,800, for a new new level of sales of $. (Enter your response for the percentage increase to one decimal place and enter your response for the new sales as a whole number.)

b) What percentage improvement is needed in a sales strategy for profit to improve to $40,800? What must sales be for profit to improve to $40,800? An increase of% in sales is required to yield a profit of $40,800, for a new new level of sales of $. (Enter your response for the percentage increase to one decimal place and enter your response for the new sales as a whole number.)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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**Case Study: Enhancing Profitability at Kennesaw Manufacturing** Kamal Fatehl, the production manager at Kennesaw Manufacturing, is currently dealing with profit numbers that are deemed insufficient for business expansion. To secure bank approval for a loan which will be used to purchase new equipment, Kamal needs to enhance the company's profit from $30,800 to $40,800. **Financial Overview:** | Items | Amount ($) | % of Sales | |-------------------------------|-----------|------------| | Sales | 280,000 | 100% | | Cost of Supply Chain Purchases| 182,000 | 65% | | Other Production Costs | 39,200 | 14% | | Fixed Costs | 28,000 | 10% | | Profit | 30,800 | 11% | **Questions and Analysis:** a) **Supply Chain Strategy:** - To achieve a profit increase to $40,800, what percentage improvement is required in the supply chain strategy? - A reduction of **5.5%** in supply-chain costs is needed, reducing the cost of supply chain purchases to **$172,000**. *(Provide the percentage decrease to one decimal place and the adjusted supply chain cost as a whole number.)* b) **Sales Strategy:** - What percentage increase in sales could also lead to a profit of $40,800, and what should the sales target be? - An increase in sales percentage is necessary, achieving a new sales total of **[Enter new sales amount]** to fulfill the target profit. *(Provide the percentage increase to one decimal place and the new sales figure as a whole number.)* This strategic financial analysis helps Kennesaw Manufacturing identify targeted improvements in either cost reduction or revenue enhancements to achieve desired profitability goals and secure necessary funding for growth.
Transcribed Image Text:**Case Study: Enhancing Profitability at Kennesaw Manufacturing** Kamal Fatehl, the production manager at Kennesaw Manufacturing, is currently dealing with profit numbers that are deemed insufficient for business expansion. To secure bank approval for a loan which will be used to purchase new equipment, Kamal needs to enhance the company's profit from $30,800 to $40,800. **Financial Overview:** | Items | Amount ($) | % of Sales | |-------------------------------|-----------|------------| | Sales | 280,000 | 100% | | Cost of Supply Chain Purchases| 182,000 | 65% | | Other Production Costs | 39,200 | 14% | | Fixed Costs | 28,000 | 10% | | Profit | 30,800 | 11% | **Questions and Analysis:** a) **Supply Chain Strategy:** - To achieve a profit increase to $40,800, what percentage improvement is required in the supply chain strategy? - A reduction of **5.5%** in supply-chain costs is needed, reducing the cost of supply chain purchases to **$172,000**. *(Provide the percentage decrease to one decimal place and the adjusted supply chain cost as a whole number.)* b) **Sales Strategy:** - What percentage increase in sales could also lead to a profit of $40,800, and what should the sales target be? - An increase in sales percentage is necessary, achieving a new sales total of **[Enter new sales amount]** to fulfill the target profit. *(Provide the percentage increase to one decimal place and the new sales figure as a whole number.)* This strategic financial analysis helps Kennesaw Manufacturing identify targeted improvements in either cost reduction or revenue enhancements to achieve desired profitability goals and secure necessary funding for growth.
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