Problem data follows: Annual number of customers surveyed 7,600 Cost of survey if conducted by RBG Associates $ 35,000 Costs related to the survey in the prior year. Mailing $17,500 Printing (done by Lester Print Shop) 6,000 Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned 2,080 Depreciation of computer and software 1,200 Electricity and phone costs 600 Total $27,380 Number of hours spent on survey by Pat Fisher 130 Required: fill in the yellow cells and also the name of the costs listed under the cost savings. The "Cost of RGB" has been filled in for you. What is the incremental cost of going outside versus conducting the survey as in the past? Cost of RGB Less cost savings: Incremental cost of outsourcing Craig Knight, the president of Knight Motors, believes that RBG will do a higher-quality job than his company has been doing. However, he is unwilling to spend more than $10,000 above current costs. Will Craig Knight accept the RBG offer? Explain in detail why or why not given his cost ceiling. For most construction projects, Bradley Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for Kerry Park shopping mall to be as follows: Materials $ 35,000 Labor to form ductwork 4,000 Labor to install ductwork 10,000 Misc. variable costs 1,500 Fixed costs allocated based on labor hours 3,000 Total costs $ 53,500 The fixed costs relate to the company's building equipment,and office staff. Expected billings and other costs pertaining to Kerry Park are: Projected billing of Kerry Park for services $ 68,000 Bradley is currently behind schedule on other projects which incurs costs as follows. The penalty is a variable cost. Late penalty $ 6,000 Walt Bradley, the owner of Bradley Heating and Cooling, is considering ordering prefabricated ductwork for the Kerry Park job, which includes the cost of sheet metal. The following cost is expected: Prefabricated ductwork cost $ 42,000 If Walt buys the prefabricated ductwork, he'll be able to reassign labor ductwork workers to another project and avoid late fees. If Walt buys the pre-fabricated ductwork, workers will still install the ductwork and incurr miscellaneous variable costs for the Kerry Park Job. Required Complete the schedule to determine if Bradley should make the ductwork or buy it prefabricated? Enter a 0 for any cells in G or H without a number. Buy Prefabricated Make the product Difference (G-H) Explain if Bradley should make the ductwork or buy it prefabricated. Does buying the fabriated ductwork save costs or increase costs?

Problem data follows: Annual number of customers surveyed 7,600 Cost of survey if conducted by RBG Associates $ 35,000 Costs related to the survey in the prior year. Mailing $17,500 Printing (done by Lester Print Shop) 6,000 Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned 2,080 Depreciation of computer and software 1,200 Electricity and phone costs 600 Total $27,380 Number of hours spent on survey by Pat Fisher 130 Required: fill in the yellow cells and also the name of the costs listed under the cost savings. The "Cost of RGB" has been filled in for you. What is the incremental cost of going outside versus conducting the survey as in the past? Cost of RGB Less cost savings: Incremental cost of outsourcing Craig Knight, the president of Knight Motors, believes that RBG will do a higher-quality job than his company has been doing. However, he is unwilling to spend more than $10,000 above current costs. Will Craig Knight accept the RBG offer? Explain in detail why or why not given his cost ceiling. For most construction projects, Bradley Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for Kerry Park shopping mall to be as follows: Materials $ 35,000 Labor to form ductwork 4,000 Labor to install ductwork 10,000 Misc. variable costs 1,500 Fixed costs allocated based on labor hours 3,000 Total costs $ 53,500 The fixed costs relate to the company's building equipment,and office staff. Expected billings and other costs pertaining to Kerry Park are: Projected billing of Kerry Park for services $ 68,000 Bradley is currently behind schedule on other projects which incurs costs as follows. The penalty is a variable cost. Late penalty $ 6,000 Walt Bradley, the owner of Bradley Heating and Cooling, is considering ordering prefabricated ductwork for the Kerry Park job, which includes the cost of sheet metal. The following cost is expected: Prefabricated ductwork cost $ 42,000 If Walt buys the prefabricated ductwork, he'll be able to reassign labor ductwork workers to another project and avoid late fees. If Walt buys the pre-fabricated ductwork, workers will still install the ductwork and incurr miscellaneous variable costs for the Kerry Park Job. Required Complete the schedule to determine if Bradley should make the ductwork or buy it prefabricated? Enter a 0 for any cells in G or H without a number. Buy Prefabricated Make the product Difference (G-H) Explain if Bradley should make the ductwork or buy it prefabricated. Does buying the fabriated ductwork save costs or increase costs?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 5.3SD: Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling...

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Related questions

Question

100%

Problem data follows:

Annual number of customers surveyed

7,600

Cost of survey if conducted by RBG Associates

$ 35,000

Costs related to the survey in the prior year.

Mailing

$17,500

Printing (done by Lester Print Shop)

6,000

Salary of Pat Fisher, part-time employee who stuffed envelopes

and summarized data when surveys were returned

2,080

Depreciation of computer and software

1,200

Electricity and phone costs

600

Total

$27,380

Number of hours spent on survey by Pat Fisher

130

Required: fill in the yellow cells and also the name of the costs listed under the cost savings. The "Cost of RGB" has been filled in for you.

What is the incremental cost of going outside versus conducting the survey as in the past?

Cost of RGB

Less cost savings:

Incremental cost of outsourcing

Craig Knight, the president of Knight Motors, believes that RBG will do a higher-quality job than his company has been doing.

However, he is unwilling to spend more than $10,000 above current costs.

Will Craig Knight accept the RBG offer? Explain in detail why or why not given his cost ceiling.

For most construction projects, Bradley Heating and Cooling buys sheet metal and forms the metal into heating/cooling ducts as needed. The company estimates the costs of making and installing ductwork for Kerry Park shopping mall to be as follows:

Materials

$ 35,000

Labor to form ductwork

4,000

Labor to install ductwork

10,000

Misc. variable costs

1,500

Fixed costs allocated based on labor hours

3,000

Total costs

$ 53,500

The fixed costs relate to the company's building equipment,and office staff. Expected billings and other costs pertaining to Kerry Park are:

Projected billing of Kerry Park for services

$ 68,000

Bradley is currently behind schedule on other projects which incurs costs as follows. The penalty is a variable cost.

Late penalty

$ 6,000

Walt Bradley, the owner of Bradley Heating and Cooling, is considering ordering prefabricated ductwork for the Kerry Park job, which includes the cost of sheet metal. The following cost is expected:

Prefabricated ductwork cost

$ 42,000

If Walt buys the prefabricated ductwork, he'll be able to reassign labor ductwork workers to another project and avoid late fees.

If Walt buys the pre-fabricated ductwork, workers will still install the ductwork and incurr miscellaneous variable costs for the Kerry Park Job.

Required

Complete the schedule to determine if Bradley should make the ductwork or buy it prefabricated? Enter a 0 for any cells in G or H without a number.

Buy Prefabricated

Make the product

Difference (G-H)

Explain if Bradley should make the ductwork or buy it prefabricated. Does buying the fabriated ductwork save costs or increase costs?

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