Tidwell, Inc., has two plants that manufacture a line of wheelchairs. One is located in Dallas, and the other in Oklahoma City. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for $1,782. Sales volume averages 20,000 units per year in each plant. Recently, the Dallas plant reduced the price of the tilt model to $1,584. Discussion with the Dallas manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called “non-value-added costs.” The Dallas manufacturing and selling costs for the tilt model were $1,386 per unit. The Dallas manager offered to loan the Oklahoma City plant his cost accounting manager to help it achieve similar results. The Oklahoma City plant manager readily agreed, knowing that his plant must keep pace—not only with the Dallas plant but also with competitors. A local competitor had also reduced its price on a similar model, and Oklahoma City's marketing manager had indicated that the price must be matched or sales would drop dramatically. In fact, the marketing manager suggested that if the price were dropped to $1,550 by the end of the year, the plant could expand its share of the market by 20 percent. The plant manager agreed but insisted that the current profit per unit must be maintained. He also wants to know if the plant can at least match the $1,386 per-unit cost of the Dallas plant and if the plant can achieve the cost reduction using the approach of the Dallas plant. The plant controller and the Dallas cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices. SQ AQ Actual Cost Materials (lbs.) 940,500 990,000 $20,790,000 Labor (hrs.) 225,720 237,600 2,970,000 Setups (hrs.) — 15,840 1,188,000 Materials handling (moves) — 39,600 2,772,000 Warranties (no. repaired) — 39,600 3,960,000 Total $31,680,000 Required: 4. There are four data analytic types: descriptive, diagnostic, predictive, and prescriptive. Choose which data analytic type(s) apply for each of the following (justify your selection): a. The target cost calculated in Requirement 1. b. The calculation of the non-value added cost in Requirement 2. c. The assessment of whether the target cost can be achieved. d. The actions recommended
Tidwell, Inc., has two plants that manufacture a line of wheelchairs. One is located in Dallas, and the other in Oklahoma City. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for $1,782. Sales volume averages 20,000 units per year in each plant. Recently, the Dallas plant reduced the price of the tilt model to $1,584. Discussion with the Dallas manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called “non-value-added costs.” The Dallas manufacturing and selling costs for the tilt model were $1,386 per unit. The Dallas manager offered to loan the Oklahoma City plant his cost
The plant controller and the Dallas cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices.
|
SQ |
AQ |
Actual Cost |
|
|
Materials (lbs.) |
940,500 |
990,000 |
$20,790,000 |
|
Labor (hrs.) |
225,720 |
237,600 |
2,970,000 |
|
Setups (hrs.) |
— |
15,840 |
1,188,000 |
|
Materials handling (moves) |
— |
39,600 |
2,772,000 |
|
Warranties (no. repaired) |
— |
39,600 |
3,960,000 |
|
Total |
$31,680,000 |
Required:
4. There are four data analytic types: descriptive, diagnostic, predictive, and prescriptive. Choose which data analytic type(s) apply for each of the following (justify your selection):
a. The target cost calculated in Requirement 1.
b. The calculation of the non-value added cost in Requirement 2.
c. The assessment of whether the target cost can be achieved.
d. The actions recommended
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
