Posted: December 26th, 2023
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Assessment Brief
Ron Mesia, Circuit City Supply Chain Manager finds his profit at $15,000 as shows below, he consider that it is inadequate for expanding his business.
Bank of America is insisting on an improved profit picture prior to approval of a loan for some new equipment. Ron would like to improve the profit line to $25,000 so he can obtain the bank’s approval for the loan.
What percentage improvement is needed in a Cost of Material Strategy for the profit to improve to $25,000? Sales, Other Production Cost, and Fixed Cost will remain the same.
What percentage improvement is needed in Sales for the profit to improve to $25,000? Cost of Material, Other Production Cost, and Fixed Cost will remain the same.
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Current Situation
% Distribution
Cost of Material Startegy
Percent Increase or Decrease
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Sales Strategy
Percent Increase or Decrease
Sales
$250,000
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100%
250,000
0%
Cost of material (supply chain)
$175,000
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70%
175,000
0%
Other production cost
$30,000
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12%
30,000
0%
30,000
0%
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Fixed cost
$30,000
12%
30,000
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0%
30,000
0%
Profit
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$15,000
6%
25,000
67%
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25,000
67%
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