Downhill Boards (DB), a producer of snow boards, isevaluating a new process for applying the finish to its snowboards. Durable Finish Company (DFC) has offered to apply thefinish for $170,000 in fixed costs and a unit variable cost of $0.65.Downhill Boards currently incurs a fixed annual cost of $125,000and has a variable cost of $0.90 per unit. Annual demand for thesnow boards is 160,000.(a) Calculate the annual cost of the current process used atDownhill Boards.(b) Calculate the annual cost if Durable Finish Companyapplies the finish.(c) Find the indifference point for these two alternatives.(d) How much of a change in demand is needed to justifyoutsourcing the process?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Downhill Boards (DB), a producer of snow boards, is
evaluating a new process for applying the finish to its snow
boards. Durable Finish Company (DFC) has offered to apply the
finish for $170,000 in fixed costs and a unit variable cost of $0.65.
Downhill Boards currently incurs a fixed annual cost of $125,000
and has a variable cost of $0.90 per unit. Annual demand for the
snow boards is 160,000.
(a) Calculate the annual cost of the current process used at
Downhill Boards.
(b) Calculate the annual cost if Durable Finish Company
applies the finish.
(c) Find the indifference point for these two alternatives.
(d) How much of a change in demand is needed to justify
outsourcing the process?
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