Tech Tools Manufacturing Case
Results& Recommendations
Kurt is unsure of how to organize the information to help him decide whether or not to start producing the Beta. He is also unsure of how the introduction of a second product will affect his operations and profitability.
Develop/calculate the following:
- Depreciation (utilizing MACRS 7 year schedule)
- Loan Interest
- Production rates over first five years
- Labor costs, billed labor rates, including benefits
- Direct expenses (labor and materials)
- Under new proposal (second five years)
- Depreciation and loan interest
- Revised production rates for Alpha and develop forecast of Direct Labor Hours for second five year period
- Production rates for Beta
- Systems Engineer labor costs (hourly wage, billable rate including benefits)
- Identify Overhead costs
- Identify cost driver
- Allocate overhead costs to both Alpha & Beta to determine earnings per unit
- Develop Income & Cash Flow statements
Conduct your analysis:
- From a profitability perspective, should Kurt pursue the Beta?
- What do you specifically attribute to your recommendation to pursue or not?
- Under what conditions could your recommendation change?
Attachment:- Assignment.rar