المحاسب الإداري المعتمد الجزء 2 C. Decision Analysis

Veldra: Robots or Hand Finishing for a New Skillet

Veldra Cookware

Question of 6 Veldra: Robots or Hand Finishing for a New Skillet

Veldra: Robots or Hand Finishing for a New Skillet Case-based question

الحالة

Veldra Cookware makes enameled cast-iron and aluminum pans, which it sells through department stores and its own website. Its product team has developed a ceramic-coated aluminum skillet that heats evenly on induction cooktops, and the board has approved a launch for next year. The skillet can be made in either of two ways, and both methods meet the same coating specification:

Automated line. A robotic spraying and curing line run by a small technician crew. Installing it requires $6,400,000 of equipment. The equipment's depreciation, its maintenance contract and the technicians' salaries are included in the line's fixed manufacturing overhead.
Hand-finishing cell. Skilled finishers apply and cure the coating in batches, using existing kilns and simple jigs.

Veldra will launch the skillet at $48, well below the $70 to $85 that established premium brands charge for comparable skillets. The low price is meant to win shelf space and market share quickly among value-conscious home cooks, and store trials showed that these buyers respond strongly to price. Management expects rival brands to release similar skillets within about two years. Retail buyers in this category compare shelf prices across brands directly.

Projected costs:

Cost	Automated line	Hand-finishing cell
Direct materials per skillet	$9.50	$10.10
Direct labor per skillet	$3.25	$9.80
Variable manufacturing overhead per skillet	$4.75	$5.10
Fixed manufacturing overhead per year	$3,175,000	$1,210,000

Selling costs do not depend on the method: $3.50 per skillet for freight and retailer commission, plus $740,000 a year for the launch sales team and advertising.

Marketing expects to sell about 180,000 skillets in the first full year and about 300,000 a year once the skillet reaches its growth stage. Veldra has no interest-bearing debt and no preferred shares. If the automated line is chosen, the board plans to finance the $6,400,000 of equipment with a term loan at 7% a year, so annual interest would be $448,000. The hand-finishing cell needs no external financing.

الافتراضات

Production equals sales each year, so there is no change in inventory.
Every fixed cost listed is annual and exists only because of the skillet: none of it would be incurred if the skillet were not launched. For either method, the fixed costs, the $48 price and the unit variable costs stay constant between 80,000 and 360,000 skillets a year (the relevant range).
Break-even and indifference volumes are measured at operating income, which is before interest and income taxes. Interest on the term loan is a financing cost, not an operating cost.
Income taxes are ignored. They would not change a break-even or indifference volume measured at operating income.
Leverage measures are point measures at a stated volume. Degree of operating leverage = contribution margin / operating income. Degree of financial leverage = operating income / (operating income - interest).

What is the skillet's annual operating break-even volume if Veldra uses the automated line? Enter a whole number of skillets. If your result is not a whole number, round it to the nearest whole skillet.

الإجابة skillets

رقم صحيح.

At what annual sales volume would the automated line and the hand-finishing cell give Veldra the same operating income? Enter a whole number of skillets. If your result is not a whole number, round it to the nearest whole skillet.

الإجابة skillets

رقم صحيح.

Veldra's managers are unsure how well their estimates for the skillet will hold up once it is on sale. Which description best explains how sensitivity analysis would help them use the cost-volume-profit model?

الإجابة Weight each possible first-year sales volume by its estimated probability to arrive at a single expected operating income, and use that one figure to judge the launch. Separate the costs that differ between the two methods from the costs common to both, so that the methods are compared on their differential costs alone. Replace the uncertain volume estimate with a sales volume that retailers have committed to, so that the break-even result no longer rests on uncertain assumptions. Recompute break-even volume and operating income after changing one input, such as the price or a unit cost, with all other inputs held at their base values.

Veldra's product team wrote six descriptions for its launch playbook. Match each description to the product life-cycle sales stage it best describes. The four sales stages begin when the product is first offered for sale. Choose "None of these stages" if no single sales stage fits the description. Categories may be used more than once.

Most orders now replace worn-out skillets rather than reach first-time buyers, the number of competing brands has stopped changing, and Veldra's marketing budget has moved to loyalty offers for its existing retail partners.

Each batch, whenever it is produced, is sampled for the same coating-adhesion and food-contact checks.

So far only a few department stores stock the skillet, most sales come from cooks trying it after the first press reviews, and the skillet's fixed production costs are spread over so few units that the cost per skillet is high.

Cooks are switching to a newer bonded-steel pan that outperforms ceramic coatings, orders shrink every quarter, and Veldra has cut the range from five sizes to two and stopped advertising it.

A panel of chefs is testing hand-made pilot skillets and logging how the coating wears; none has been offered for sale.

Monthly orders are running far ahead of the same months last year, the cost per skillet keeps falling as volume climbs, and retailers are asking for larger allocations than Veldra can ship.

Complete the pricing analysis. Setting the launch price at $48, well below established premium brands, to win market share quickly is Launch pricing strategy . The approach suits the skillet because its target buyers are Buyer behavior that supports it . Once rival brands release similar skillets and retail buyers compare shelf prices directly, the approach that best fits Veldra's position is Pricing once rivals enter .

Complete the controller's briefing on leverage. (1) Before considering how the equipment is financed: because more of its operating costs are fixed, the automated line has the higher Measure raised by the cost structure : at any volume above both break-even points, a given percentage change in unit sales produces a larger percentage change in operating income. (2) If the equipment is financed with the term loan, the $448,000 of annual interest creates Effect of the term loan : net income becomes more sensitive to a given percentage change in operating income. (3) If Veldra instead paid for the equipment entirely by issuing new common shares, the automated line's degree of operating leverage would Operating leverage under equity funding . (4) Under that all-equity plan, Veldra's degree of financial leverage would be Degree of financial leverage under equity funding .

تظهر الدرجات والإجابات الصحيحة والشروح فور تسليم الإجابات. ولا يحصل السؤال غير المُجاب على أي درجة.

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حالات تدريبية أصلية من إعداد صرح. ليست أسئلة من امتحانات IMA، ويخضع تصحيحها لسياسة صرح الخاصة، وهي تختلف عن سياسة الامتحان الرسمي.