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Chapter: 1 -Problem: 7 >> (a) Calculate the LCC per carton for College-Craft Glassware for AirSeal, AirWrap, and Cardboard.(b) Based on part (a), what is the market potential for AirSeal and AirWrap for this customer?
Answer Preview: Part (a) Life Cycle Cost (LCC) Cardboard AirSeal AirWrap Shipping Carton $ .45 $ .45 $ .45 Packing L…

, Chapter: 1 -Problem: 6 >> (a) Calculate the LCC per shipment for FAP for Air Cap, AirWrap, and “Loose Peanuts,” using the data from the case.(b) Based on part (a), what is the market potential for AirSeal and for AirWrap for this customer?
Answer Preview: Part (a) Life Cycle Cost (LCC) Loose Peanuts AirSeal AirWrap Product Carton $ .37 $ .37 $ .37 Packin…

, Chapter: 1 -Problem: 8 >> (a) What annual sales level for AirWrap can be supported using the excess capacity on the AirSeal equipment as of 1985? Assume average price of $29 to distributors.(b) So what?
Answer Preview: (a) Total Capacity 961 million sq ft. Less Air Cap Sales 721 million sq ft. = Availab…

, Chapter: 1 -Problem: 10 >> (a) Estimate the full cost per 1000 sq. ft. to manufacture and ship AirWrap using its own equipment.(b) Comment
Answer Preview: (a) Raw Material $ 3 22 (assuming 3/16" is the ave…

, Chapter: 1 -Problem: 4 >> (a) Calculate the LCC to Noritake per shipment for AirSeal and AirWrap.(b) Based on part (a), what is the market potential of AirWrap for this customer?
Answer Preview: Part (a) Life Cycle Cost (LCC) AirSeal AirWrap Packag…

, Chapter: 1 -Problem: 3 >> a) Calculate the break-even sales volume in dollars for AirSeal in 1985.b) Discuss the “Operating Leverage.”
Answer Preview: a) Contribution Margin = Sales RM VOH Freight Commissions (at 2% …

, Chapter: 1 -Problem: 1 >> (a) What is the Return on Investment (ROI) for AirSeal for 1985? (b) How is the AirSeal product line doing, using the “DuPont formula?”
Answer Preview: (a) Profit = $9 3 million, per Exhibit 1 in the case Investment A/R (45 DS…

, Chapter: 1 -Problem: 5 >> (a) Calculate the LCC for NEW per-shipment for AirSeal and AirWrap.(b) Based on part (a), what is the market potential for AirWrap for this customer?
Answer Preview: Part (a) Life Cycle Cost (LCC) AirSeal AirWrap Packing material $ 0 58 1 $ 0 32 2 Other shipping cos…

, Chapter: 1 -Problem: 2 >> How would the ROI change if excess capacity (Fixed Manufacturing Overhead, Factory Labor, and Manufacturing Equipment) were not charged to the product line?
Answer Preview: 1985 volume = 721 million sf Capacity = 961 million sf Excess capacity = 240 mil…

, Chapter: 1 -Problem: 11 >> (a) Estimate the ROI for AirWrap if it could operate at 90% of capacity in its own manufacturing facilities. Assume Selling and Marketing at 7% of Sales, R&D at zero, and Administrative cost at 3% of Sales. Assume the $29 average selling price.(b) Comment
Answer Preview: (a) Income Statement (Millions$) Sales $25 1 (961,000 x .9 = 865,000 x $29.) Raw Material $ 2 8 (865…

, Chapter: 1 -Problem: 9 >> (a) Estimate the variable cost per 1,000 sq. ft., on average, to manufacture and ship AirWrap using the AirSeal Equipment. (Assume the average bubble thickness is 3/16 inch.)(b) Estimate the full cost per 1000 sq. ft., on average, to manufacture and ship AirWrap using the AirSeal Equipment.(c) Comment on the estimated contribution margin and gross margin of AirWrap when produced on AirSeal machine
Answer Preview: (a) Raw Material (weighted average of 2 90 and 9 11) $3 22 Variable Manufacturing OH …

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5 Reviews for Cases in Cost Management A Strategic Emphasis Textbook Questions And Answers