unit 3
Based on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions):
1. Cost a) Cost of Production: Right now Albatross is producing two different types of anchors. The snag hook anchor is costing $11.00 per pound and the bell hook is selling for $8.00 per pound at this current time. The cost of production line also includes economies of scale in material purchasing, raw materials and finished goods sitting idle in the warehouse. b) Economies of Scale in material purchasing: Economies of scale are reductions in average costs attributable to production volume increases. c) Cost of Raw Materials Sitting Idle in the Warehouse: d) Cost of Finished Goods Sitting Idle in the Warehouse:
2. Speed of manufacturing process from order to finished product.
3. Flexibility in filling order(s)
4. Technology
5. Capacity and facilities
6. Service to customers
Question Two
There are many ways that mushroom/bell anchors may be manufactured. Albatross Anchor is considering two new manufacturing processes (Process A and Process B) to reduce costs. Analysis of the information below will help determine which process has the lowest breakeven point (this validates the process is more cost effective).
For each process the following fixed costs and variable costs are identified below:
Anchor and Process Process A Process B
Sale price per anchor $45.00 $45.00
Total Fixed cost $ 650,000.00 $950,000.00
Variable cost per anchor $ 36.00 $ 29.99
Based on the information in the table above complete the table below:
Anchor and Process Process A Process B
(a) Fixed costs per anchor
(b) The total number of anchors to attain break–even point for Process A and Process B
(c) Based on your calculations which Process (A or B) that you would recommend for adoption (you can select only one). Please make sure to
1. Cost a) Cost of Production: Right now Albatross is producing two different types of anchors. The snag hook anchor is costing $11.00 per pound and the bell hook is selling for $8.00 per pound at this current time. The cost of production line also includes economies of scale in material purchasing, raw materials and finished goods sitting idle in the warehouse. b) Economies of Scale in material purchasing: Economies of scale are reductions in average costs attributable to production volume increases. c) Cost of Raw Materials Sitting Idle in the Warehouse: d) Cost of Finished Goods Sitting Idle in the Warehouse:
2. Speed of manufacturing process from order to finished product.
3. Flexibility in filling order(s)
4. Technology
5. Capacity and facilities
6. Service to customers
Question Two
There are many ways that mushroom/bell anchors may be manufactured. Albatross Anchor is considering two new manufacturing processes (Process A and Process B) to reduce costs. Analysis of the information below will help determine which process has the lowest breakeven point (this validates the process is more cost effective).
For each process the following fixed costs and variable costs are identified below:
Anchor and Process Process A Process B
Sale price per anchor $45.00 $45.00
Total Fixed cost $ 650,000.00 $950,000.00
Variable cost per anchor $ 36.00 $ 29.99
Based on the information in the table above complete the table below:
Anchor and Process Process A Process B
(a) Fixed costs per anchor
(b) The total number of anchors to attain break–even point for Process A and Process B
(c) Based on your calculations which Process (A or B) that you would recommend for adoption (you can select only one). Please make sure to
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