Kamal Fatehl, production manager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown in the state-ment below)—inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loanfor some new equipment. Kamal would like to improve the profitline to $25,000 so he can obtain the bank’s approval for the loan.% OF SALESSales $250,000 100%Cost of supply chain purchases 175,000 70%Other production costs 30,000 12%Fixed costs 30,000 12%Profi t 15,000 6%a) What percentage improvement is needed in a supply chainstrategy for profit to improve to $25,000? What is the cost ofmaterial with a $25,000 profit?b) What percentage improvement is needed in a sales strategy forprofit to improve to $25,000? What must sales be for profit toimprove to $25,000?
Kamal Fatehl, production manager of Kennesaw
Manufacturing, finds his profit at $15,000 (as shown in the state-
ment below)—inadequate for expanding his business. The bank is
insisting on an improved profit picture prior to approval of a loan
for some new equipment. Kamal would like to improve the profit
line to $25,000 so he can obtain the bank’s approval for the loan.
% OF SALES
Sales $250,000 100%
Cost of supply chain purchases 175,000 70%
Other production costs 30,000 12%
Fixed costs 30,000 12%
Profi t 15,000 6%
a) What percentage improvement is needed in a supply chain
strategy for profit to improve to $25,000? What is the cost of
material with a $25,000 profit?
b) What percentage improvement is needed in a sales strategy for
profit to improve to $25,000? What must sales be for profit to
improve to $25,000?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
