Complete the questions of the Week 5 and Week 6 sheets.
Attached are the copmplete worksheet.
Pangea Corporation
Pangea manufactures sunglasses with various fashion frame options. Their sunglasses generally sell for $10-$20 per pair.
The frames are created in-house (molded), with the lenses and screws purchased from other companies.
Assignment
1) Using the data provided, and your information from Week 3, calculate the fixed, variable and total gross margin for the new potential "Gleamz" sunglasses.
2) Using your gross margin by product line data from week 3, compare "Beamz" with "Gleamz".
3) Based on the marginal analysis, if Gleamz was a new added product, would it be profitable? Why or why not?
4) Should Pangea replace Beamz with Gleamz? Or should they keep Beamz? Write a paragraph explaining and justifying your position. Provide data and analysis to backup your response.
Gleamz
Gleamz glasses would sell for $19 each, and expected volume would be 200,000 units annually
One batch produces 500 frames.
Each pair of Gleamz sunglasses would requires 2 lenses, 4 screws, and 1 gallon of polymer (which gets made into frames)
One batch of Gleamz glasses would takes 3 hours in the Mixing Department, 6 hours in the Extruding Department, and 15 hours in Assembly
The marketing department has determined that larger frames are coming into fashion and they believe that Gleamz would fill that market need.
From Week 3: One batch of Beamz glasses takes 3.5 hours in the Mixing Department, 8 hours in the Extruding Department, and 20.7 hours in Assembly
From Week 3: Sunglass lenses cost $1.025 per lens, and screws cost $0.05 per screw.
From Week 3: Polymer costs $5.50 per gallon
Pangea Corporation
Pangea manufactures sunglasses with various fashion frame options. Their sunglasses generally sell for $10-$20 per pair.
The frames are created in-house (molded), with the lenses and screws purchased from other companies.
Assignment
Regardless of your recommendation last week to add a product or not, the corporation has decided to go ahead and add the Gleamz product line to your factory.
However, they have decided to ADD Gleamz, and not discontinue any other product line; therefore, they need some new equipment.
There are two different companies that sell the equipment you can use for the additional capacity to produce Gleamz.
1) Using either NPV of IRR (your choice), determine which new equipment your company should purchase for the new product line.
2) Write a paragraph explaining why you chose either NPV or IRR.
3) Explain which decision you reached and the justification for that decision.
Gleamz
Use your data from Week 5 to determine the gross profit per unit that will be generated annually for Gleamz.
The unit gross profit from Week 5 (multiplied by the potential volume based on the equipment) will be the expected future returns for the life of the equipment purchased.
Pangea Corporation uses an expected Capital Rate of Return of 12%.
Pangea uses straight line depreciation for all equipment.
Ignore income taxes
Company 1 - Millipede
The equipment would cost $2,000,000 up front.
It has a 5 year useful life.
Millipede's equipment would allow for 140,000 volume of Gleamz per year.
Company 2 - Jack Moose
The equipment would cost $3,000,000 up front.
It has an 7 year useful life.
Jack Moose's equipment would allow for 155,000 volume of Gleamz per year.
Attachment:- Project.rar