Krafts, Inc. uses the decentralized form of organization and considers each of its divisions as an investment center. Division A is currently selling 30,000 units of Part X annually, although it has sufficient production capacity to produce 42,000 parts per year. Variable manufacturing costs amount to P36 per part, while the total fixed costs amount to P180,000. These 30,000 parts are sold to outside market at P76 per part. Division S, also a part of the Krafts, Inc. has indicated that they would like to get from Division A 3,000 parts at a price of P74. Per part because they presently buying the parts from the outside supplier at that price. Assume that Division A could sell the entire 42,000 parts to outside market. What is the effect on the overall operating income of Krafts, Inc. if Division A will be required by the top management to sell 3,000 parts to Division S at a price
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.
Krafts, Inc. uses the decentralized form of organization and considers each of its divisions as an investment center. Division A is currently selling 30,000 units of Part X annually, although it has sufficient production capacity to produce 42,000 parts per year. Variable
Division S, also a part of the Krafts, Inc. has indicated that they would like to get from Division A 3,000 parts at a price of P74. Per part because they presently buying the parts from the outside supplier at that price.
Assume that Division A could sell the entire 42,000 parts to outside market. What is the effect on the overall operating income of Krafts, Inc. if Division A will be required by the top management to sell 3,000 parts to Division S at a price of:
a.) P36 b.)P74
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