Target Costing; International Harpers Ltd. is a UK manufacturer of casual shoes for men andwomen. It has sustained strong growth in the UK market in recent years due to its close attentionto fashion trends. Harpers’s shoes also have a good reputation for quality and comfort. To expandthe business, Harpers is considering introducing its shoes to the U.S. market, where comparableshoes sell for an average of $90 wholesale, more than $16 above what Harpers charges in theUK (average price, £57 and average exchange rate of $1.30 per £ ). Management has engaged amarketing consultant to obtain information about what features U.S. consumers seek in shoes ifthey desire different features. Harpers also has obtained information on the approximate cost ofadding these features:[LO 13-1]Features Desired in theUnited StatesCost to Add(in U.S. $)Importance Rating (5 is most important)Colorfast material $4.50 3Lighter weight 6.75 5Extra-soft insole 3.00 4Longer-wearing sole 3.00 2The current average manufacturing cost of Harpers’s shoes is £43 (approximately $56 U.S.), whichprovides an average profit of £14 ($18 U.S.) per pair sold. Harpers would like to maintain thisprofit margin; however, the firm recognizes that the U.S. market requires different features and thatshipping and advertising costs would increase approximately $10 U.S. per pair of shoes.Required1. What is the target manufacturing cost for shoes to be sold in the United States?2. Which features, if any, should Harpers add for shoes to be sold in the United States?3. Strategically evaluate Harpers’s decision to begin selling shoes in the United States.
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.
Target Costing; International Harpers Ltd. is a UK manufacturer of casual shoes for men and
women. It has sustained strong growth in the UK market in recent years due to its close attention
to fashion trends. Harpers’s shoes also have a good reputation for quality and comfort. To expand
the business, Harpers is considering introducing its shoes to the U.S. market, where comparable
shoes sell for an average of $90 wholesale, more than $16 above what Harpers charges in the
UK (average price, £57 and average exchange rate of $1.30 per £ ). Management has engaged a
marketing consultant to obtain information about what features U.S. consumers seek in shoes if
they desire different features. Harpers also has obtained information on the approximate cost of
adding these features:
[LO 13-1]
Features Desired in the
United States
Cost to Add
(in U.S. $)
Importance Rating
(5 is most important)
Colorfast material $4.50 3
Lighter weight 6.75 5
Extra-soft insole 3.00 4
Longer-wearing sole 3.00 2
The current average
provides an average profit of £14 ($18 U.S.) per pair sold. Harpers would like to maintain this
profit margin; however, the firm recognizes that the U.S. market requires different features and that
shipping and advertising costs would increase approximately $10 U.S. per pair of shoes.
Required
1. What is the target manufacturing cost for shoes to be sold in the United States?
2. Which features, if any, should Harpers add for shoes to be sold in the United States?
3. Strategically evaluate Harpers’s decision to begin selling shoes in the United States.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
