Exercise 3 (Value Chain Analysis)Ram Radio manufactures yacht radios, navigational equipment and depthsounding and related equipment from a small plant near MNR-North,Tuguegarao City. One of Ram's most popular products, making up 40 percentof its revenues and 35 percent of its profits, is a marine radio, model VF4500,which is installed on many of the new large boats produced in the Northern Luzon. Average production and sales are 500 units per month. Ram hasachieved its success in the market through excellent customer service andproduct reliability. The manufacturing process consists primarily of assemblyof components purchased from various electronics firms, plus a small amountof metalworking and finishing. The manufacturing operations cost P110 perunit. The purchased parts cost Ram P250, of which P130 is for parts that Ramcould manufacture in its existing facility for P80 in materials for each unit,plus an investment in labor and equipment that would cost P35,000 per month.Ram is considering outsourcing to another MNR firm, Basher Enterprises, themarketing, distribution and servicing for its units. This would save RamP125,000 in monthly materials and labor costs. The cost of the contract wouldbe P105perradio.Required:1. Prepare a value-chain analysis for Ram to assist in the decision whether topurchase or manufacture the parts, and whether to contract out themarketing, distribution, and servicing of the units.2. Should Ram (a) continue to purchase the parts or manufacture them and(b) continue to provide the marketing, distribution and service or outsourcethis activity to Basher? Explain your answer.

1. The value chain for Ram Radio follows: Value Activity Option One Option Two First:…

Exercise 3 (Value Chain Analysis) Ram Radio manufactures yacht radios, navigati sounding and related equipment from a smal Tuguegarao City. One of Ram's most popular pro- of its revenues and 35 percent of its profits, is a m which is installed on many of the new Jarge boa

Exercise 3 (Value Chain Analysis) Ram Radio manufactures yacht radios, navigati sounding and related equipment from a smal Tuguegarao City. One of Ram's most popular pro- of its revenues and 35 percent of its profits, is a m which is installed on many of the new Jarge boa

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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