Free

Business Proposal In Clear Hear Scenario - Essay Example

Comments (0) Cite this document
Summary
The contribution margin from Beta is $18 and from Alpha is $12. The difference in the contribution margin is because of the higher selling price of Beta.
Kendra Sherman has procured an order from Big Box…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.8% of users find it useful
Business Proposal In Clear Hear Scenario
Read TextPreview

Extract of sample "Business Proposal In Clear Hear Scenario"

Business Proposal In Clear Hear Scenario Clear Hear operates two production lines in its factory- Alpha and Beta. The contribution margin from Beta is $18 and from Alpha is $12. The difference in the contribution margin is because of the higher selling price of Beta.
Figure 1. Contribution margin of Alpha and Beta.
1- Alpha
2- Beta
Kendra Sherman has procured an order from Big Box for manufacturing 100000 units at a price of $15 each, which are nearly identical to Alpha. However, Lisa Norman, the production manager informs that the excess capacity is only 70000 units. So, there are two options either 30000 units from Beta model, can be switched to Alpha or the Original Equipment Manufacturers (OEM) proposal to manufacture a prototype at a price of $14 per unit can be adopted. The decision will be based on the contribution earned or foregone by adopting an option. In the first option, the company looses a contribution of $11 and in the second option, the company can earn an additional contribution margin of $1 per unit. So, in order to maximize the revenue the company should accept OEMs offer to manufacture the remaining 30000 units. This will result in an additional revenue of $1500000.
Figure 2. Comparison of contribution margin.
Bar 1-If Beta is switched to Alpha
Bar 2- If the extra 30000 units are manufactured through OEM
From the above figure, it can be seen that the companys contribution becomes negative, if Beta model is switched to Alpha. So, it is advised that the company should adopt the second option. This will help the company to maximize its revenue. By doing so, the company will also be able to make use of its excess capacity. For this, the company will not have to incur any further fixed costs. As a result of this the existing fixed costs will get distributed over the excess units. The utilization of the excess capacity will also lower the Average Cost (AC) of each unit. This is because the Total Cost will now be allocated over a large number of units resulting in a reduced AC.
As the company does not have to incur any extra fixed cost for the excess 100000 units the profit will move up. For the additional units, the only cost that the company has to bear is the Variable Cost as the fixed costs remain fixed irrespective of the level of production.
In order to reduce the cost of production, the company can lower the material cost by setting up production centers near the sources of supply. This will reduce the distribution cost and will thus lower the purchase cost of the material (Kobayshi, 2003).
The company can also lower its overall costs by minimizing waste and ensuring efficient management of the available resources. By purchasing the goods in bulk quantity the company can avail the trade discounts which will reduce the cost of material.
Annexure
Calculation of contribution per unit-
Production of excess 30000 units-
Production of 70000 units by using the existing capacity of Alpha
References
Kobayshi, T. (2003). How to reduce manufacturing and management costs of tractors and agricultural equipment. Retrieved October 28, 2009, from
http://ecommons.cornell.edu/bitstream/1813/10334/1/Invited%20Overview%20Club%20of%20Bologna%20Kobayashi%20text%2019Dec2003.pdf Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Business Proposal In Clear Hear Scenario Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Business Proposal In Clear Hear Scenario Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/miscellaneous/1558977-business-proposal-in-clear-hear-scenario
(Business Proposal In Clear Hear Scenario Essay Example | Topics and Well Written Essays - 500 Words)
Business Proposal In Clear Hear Scenario Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/miscellaneous/1558977-business-proposal-in-clear-hear-scenario.
“Business Proposal In Clear Hear Scenario Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1558977-business-proposal-in-clear-hear-scenario.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Business Proposal In Clear Hear Scenario

Business Proposal

...? Business Proposal The introduction of the new flavor yogurt by ramptons milk industries has made the company to position the product in the market. The product was developed to meet the high demand of yogurt in the market. Revenue maximization being one of the goals for any given company, ramton’s company has made a broad step to increase revenue. This has been achieved through strategies that were formulated to increase the revenue earned by the company. These strategies were; to increase on the quantity sold, through increasing the expenditure of the customers. The managerial department has ensured quality design, employment of quality and qualified labor in order to make the production process efficient and successful. Profit... ...
3 Pages(750 words)Research Paper

Assignment 2 - Business Scenario

...?Business Scenario The UNGC is an initiative, consisting of a primary framework, of the united nation that seek to initiate firms all over the globe in adopting sustainable and corporate responsibility policies I their respective organizations1. Apple is a worldwide company with a moral responsibility that enables equal treatment to all employees. The company is conversant with the principles of UN Global compact as we are Member Company. As our corporation boasts of increase in market size, apple has attracted different Local Networks that assess the ways of enabling strict compliance to the Global compact ethics. Apple became a Global compact signatory after realizing the brand and reputation toward...
4 Pages(1000 words)Assignment

Business proposal

...in improving the living standard of the community population. Therefore, we would highly appreciate your knowledgeable review along with approval regarding the proposed protocol. In this proposal, your questions and further recommendations would be highly acknowledged. We look forward to your kind response regarding the approval of the proposal. Sincerely, Chun Hao EXECUTIVE SUMMARY In relation to the current scenario of the communities, especially the lower income group around the university campus, a significant support is highly essential in order to develop their health and educational background at a greater sustainable level. Correspondingly, the population of the...
5 Pages(1250 words)Assignment

Business Proposal

...Business Proposal For Tesco's proposed retail outlets in India, Better Comm. designing studio has a proposal that will ensure consistency of design all over the country while ensuring efficient and smooth operations. Better Comm. has long met the needs of the retail industries through it's full-fledged design solutions that ensure world class design templates. We look forward to adding your prestigious enterprise on our long list of satisfied clients. Our proposed design studios will ensure consistency of look and feel while the satellite studios will download design templates and adapt them to the local flavor. Managing Director/Better...
4 Pages(1000 words)Essay

Business Proposal

...by loading trucks/trailers provided by switching operator? 9 5.Implementation Plan and Schedule 9 6.Remaining Issues 9 1. Summary of proposal Pungo Transportation Corp. is pleased to offer our bid to provide pre-approved common carrier flat bed loading services covering switching, spotting and pre-loading services to Plymouth Weyerhaeuser facility of Weyerhaeuser in North Carolina. We have been providing the above services for over 15 years to Plymouth Weyerhaeuser and have an extremely satisfying track record in meeting the needs of the customer. We currently haul loads for Weyerhaeuser and we have a working business relationship for the last 15 years or more. We do have the necessary resources,...
8 Pages(2000 words)Essay

Decisions Business Scenario

...Decision Making Techniques: A conceptual Approach in a Business Scenario with Problem Formulation and Identification of Solutions. Problem Formulation: Introduction: With the advent of globalisation, the world has become small and the business organisations breaking all geographical barriers spread their wings to far off countries and locations, wherever they find economies of operations. This has given rise to various organisational problems caused by environmental, social, cultural, bahvioural and ethical issues. Such issues aggravate the complexities of business. In addition, economic issues like aggressive competition and governmental controls also make the business scenario a problematic one to tackle. But as the saying goes... ’ and...
10 Pages(2500 words)Essay

Business Scenario

...making process is high. There are three major stakeholders and they are local self-government, local population and the vested interest business group. The role of stake holders, the current concerns and the issues are analysed and various options have been provided for to resolve the issues. Among the options and features proposed, a gradual training of the local population, providing them training and exposing them to better marketing and management principles have been suggested. Appendices Figure 1. Three Risks Diagram Table 2. SMART Tool 9 for Risk Management.   SMART Tool 9 for Risk Management   RISKS P I ACTION TO MANAGE RISKS S Business Risks 6 3 Implement weather forecasting...
5 Pages(1250 words)Essay

Week 4 Individual Assignment

...Economic Analysis Clear Hear of Phoenix Connie Johnson 9/5 In the business world managers have to make strategic decisions that affect the bottom line of the company. A company can improve its profitability by either increasing its revenues or decreasing its expenses. This paper will analyze the scenario Clear Hear. Clear Hear is a manufacturer of cellular phones. The cellular phone industry is one of the largest industries in the world. In 2010 there are nearly 4.7 billion cellular phone subscribers across the world; while in the US there are 285 million subscribers (Plunkett Research, 2010). Since the...
5 Pages(1250 words)Essay

Business proposal

...Business proposal Leather boxing gloves require an elaborate and long process to manufacture the end. They require cotton, and synthetic fabric in order for the gloves to be ready for use. The concentration or less of cotton required would vary depending on the use of such gloves. If the gloves are for hitting the boxing bags lesser cotton are needed, for pads, more cotton would be put inside the synthetic fabric and most cotton would be used if the gloves are for spurring (Ballard 9). Thus, as a prospective entrant into the business, the most reliable and important material to consider is the availability of cotton, from the manufacturers. If the farmers produce more cotton then prices...
2 Pages(500 words)Coursework

Business scenario Analysis 06012

...and nights were very popular among the local customers and tourists, and the restaurant was doing well in previous years. But people are now not liking it as it makes the place more loud and noisy. Solution: It is also notified the impact of aesthetics on the visitors; therefore, it is recommended that the restaurant set a corner for the fun side and arrange the rest of the area as a peaceful place to enjoy food. There is a clear linkage between ambiance and the customer satisfaction. Also, usually dinner time people are more concerned with relaxed ambiance and so supper can have some loud music etc. Problem # 3 Another critical issue faced in the Fabrizio’s management style. When Philip Jackman was handling the...
5 Pages(1250 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Business Proposal In Clear Hear Scenario for FREE!

Contact Us