Superior Developing Co. Case Analysis

Q1. Based on the 2005 statement of profit and loss info (Exhibits one particular and 2), do you accept Water's decision to keep product 103?

To be able to support an impression on the side we all decided to assess all the probable scenarios.

In case the company management decided that it must be better to prevent the production of product 103, they may do this in one of the following ways: 1 . Prevent production and any business related to merchandise 103. installment payments on your Stop creation but delegate it to a different company and continue the distribution. several. Stop creation and utilize the available production capacity to be able to produce item 101 or perhaps 102.

In case the company managing decided that it can be better to continue the production of product ciento tres, they may do this with the following good manners: 1 . Keep up with the same amount of production.

2 . Increase the amount of production.

three or more. Lower the amount of creation.

4. Replace 102 creation capacity with 103 if the 103 center has not enough capacity to take advantage of economies of scale

Research of the P& L statement of thirty-one December 2004

If we take a look at the P& L assertion for the 2004 it can be obvious that product ciento tres is getting substantial loss. The measurements show that there is a loss of 2 . 16$ per unit sold which usually overall quantites for the total amount sold to around 2 . 209 million bucks.

A closer look at the costs attributed to product 103 shows the next.

|Costs department: Direct/Indirect (000) | |Direct |В |Indirect |В | |Direct Labor(v) | dollar 25. 921, 00 |Rent(non v) | $ five. 324, 00| |Materials(v) | $ 18. 208, 00 |Property Taxes(almost non versus. ) | $ 1 . 525, 00| |Supplies(v) | $ 1 ) 360, 00 |Property Insurance(non v) | $ 1 ) 463, 00| |Repairs(v) | $ 438, 00 |Indirect Labor | $ 8. 846, 00| |Compensation Insurance(v) | $ 1 . 296, 05 |Light & Heat(almost non v, fuel dep. ) | $ | | | | |394, 00 | |Power(v) | $ 773, 00 |Building Sevice(non v) | bucks | | | | |266, 00 | |В |В |Compensation Insurance(non v. ) | $ | | | | |442, 30 | |Total: |46996, 05 |Total: | dollar 18. 260, 30 | | | | | | | | | | | |Percentage from the total price: |72% |28% |...

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