...Optimizing Printed Circuit Board Production: A Case Study Abstract This paper focuses on the production of 5 different printed circuit boards (PCBs). The purpose of this paper is to understand the best production model to reach maximum profit. It is understood that there are production capacities that will limit the overall amount of products produce. Through the use of Linear Programming we can determine, based on the current circuit boards sale price, the number of each board type the plant needs to produce. It can also be determined which production capacity would need to be increased in order to increase production numbers. In addition, this paper will look at how the production schedule will alter based on customer demands and changes in sales price. Optimizing Printed Circuit Board Production A Case Study ABC Electronics is a manufacturer of printed circuit boards and there is 5 different types the company produces. The Company wants to use Linear Programming to find the best production schedule to maximize profits. For each circuit board (A5464, A2668, G3897, Z9794 and L8687) the company has determined what the profit is for each board type. The profit was calculated by subtracting the material, labor and overhead costs from the selling price (see Appendix A. Individual Profit line). It was also determined the producing minutes for each board during all steps of the process (Laminating, Drilling, Plating, Etching, and Wiring) and the capacity in minutes each...
Words: 904 - Pages: 4
...costing General: Product cost = Unit cost Page | 1 Production cost CGS Inventory Marginal Cost 1. Unit cost Direct material Direct Labour Direct expenses Variable production overheads 2. CGS = Units sold X unit cost 3. Inventory = units X unit cost (Production units - Sales units) 4. Contribution per unit = Selling price per unit – unit cost – variable non production cost Absorption costing 1. Unit cost Unit cost as per marginal costing Fixed production overheads (OAR per unit) 5. Total contribution = units sold X contribution per unit 5. Total Gross profit = units sold X Gross profit per unit Or Total sales – CGS 6. Profit = total GP ± over/ (under absorption) – Non Production costs 7. Over/ (under absorption) = Absorbed FOH – Actual FOH 6. Profit = Total contribution – Fixed costs 7. Fixed costs = Actual Production FOH + Non production 8. Non production costs Admin + selling + distribution etc. 2. CGS = Units sold X unit cost 3. Inventory = units X unit cost (Production units - Sales units) 4. Gross profit per unit = Selling price per unit – unit cost DIFFERENCE IN PROFIT • • Difference in profit is due to difference in unit cost. You might have noticed that difference is OAR/ unit. In marginal costing fixed production overheads are treated as period cost. Hence not included in inventory valuation and made expense in a period. (Same like non production cost in an income statement). www.financedoctors...
Words: 271 - Pages: 2
...management suggested, they need to be subtracted from 1. 1 - .1635 = .8365 which = 83.65% Same logic/steps for the rest of the values: 18,000 24,000 28,000 Z = (18,000-20,000)/5102 z=(24,000-20,000)/5102 z=(28,000-20,000)/5102 z = -.39 z=.78 z= 1.57 1 - .3483 = .6517 1 - .7823 = .2177 1 –.9418 = .0582 which = 65.17% which = 21.77% which = 5.82% 3. Projected Profit for management under three scenarios which are 10,000 20,000 and 30,000 units Order | 10,000 units | 20,000 units | 30,000 units | 15000 | 8*10000-11*5000 =$25000 | 8*15000=$120000 | 8*15000 = $120000 | 18000 |...
Words: 1198 - Pages: 5
...be imposed each day production falls short. A new production process was also proposed to increase production; analysis of the data shows that the new process will reduce production deviations and increase average production. We recommend switching to the new process to increase production and propose a bid that guarantees at least 626 units produced per day. This will average approximately $2,000 profit each day while keeping the probability of incurring penalties under 10%. Analysis OMI’s performance data under the existing process shows that the company can ensure a daily profit of $1,000 if it proposes a minimum daily production level of 612 units, with a probability of penalty of 28.26%. Accordingly, we believe that the probability of default is too high, forcing the company to lower the bid amount and resulting in a competitor potentially winning the contract. OMI has also reviewed a new process suggested by one of the...
Words: 687 - Pages: 3
...ASSESSMENT OF COMPETITION IN CEMENT INDUSTRY IN INDIA RESEARCH PROJECT REPORT SUBMITTED TO THE COMPETITION COMMISSION OF INDIA SUBMITTED BY: SUMIT PAL SINGH MBA (2011-2013) VINOD GUPTA SCHOOL OF MANAGEMENT, IIT KHARAGPUR i ACKNOWLEDGMENT I extend my sincere gratitude to The Competition Commission of India, for giving me an opportunity to intern at the commission. In specific, I thank Mr. Rakesh Kumar, Joint Director (Eco) for being a guiding force throughout this submission and being instrumental in the successful completion of this project. Without him every effort of mine would have been in vain. He has been kind and patient throughout, to share with me his precious time, thoughts and insights. Sumit Pal Singh Vinod Gupta School of Management, IIT Kharagpur ii DISCLAIMER This project report/dissertation has been prepared by the author as an intern under the Internship Programme of the Competition Commission of India for academic purposes only. The views expressed in the report are personal to the intern and do not reflect the view of the Commission or any of its staff or personnel and do not bind the Commission in any manner. This report is the intellectual property of the Competition Commission of India and the same or any part thereof may not be used in any manner whatsoever, without express permission of the Competition Commission of India in writing. iii TABLE OF CONTENTS 1. INTRODUCTION ..........................................................
Words: 19133 - Pages: 77
...is a total cost technique under which total cost (i.e., fixed cost as well as variable cost) is charged as production cost. In other words, in absorption costing, all manufacturing costs are absorbed in the cost of the products produced. Marginal Costing: An alternative to absorption costing is marginal costing, also known as ‘variable costing’ or direct costing. Under this technique, only variable costs are charged as product costs and included in inventory valuation. Fixed manufacturing costs are not allotted to products but are considered as period costs and thus charged directly to Profit and Loss Account of that year. Fixed costs also do not enter in stock valuation. Marginal Costing: Definition CIMA London as ‘The accounting system in which variable costs are charged to cost units and fixed costs of the period are written off in full, against the aggregate contribution. Its special value is in decision making’. Segregation of costs into fixed and variable elements • In marginal costing all costs are classified into fixed and variable. Semi-variable costs are also segregated into fixed and variable elements. Marginal costs as products costs • Only marginal (variable) costs are charged to products produced during the period. Fixed costs as period costs • Fixed costs are treated as period costs and are charged to Costing Profit and Loss Account of the period in which they are incurred. Valuation of inventory • The work-in-progress...
Words: 1480 - Pages: 6
...remained the same while profits have declined by almost 24%. Their chair division produces three different types of chairs, the Atherley, the Caledonia and the Parkdale. Each model has its own production plan and production costs. The increasing production costs, alongside the intense competition the company faces, have become a great cause of concern for John Atherley. Problem Statement Is Atherley Furniture Company able to continue to operate their chair division while reducing the debt and increasing the profits of the company? Objective of Key Player With the use of the company’s income statements for the last four years, John Atherley must decide the future of the company’s chair division. Situation Analysis The Canadian furniture industry suffered greatly in the 1990s because of the economic recession, as well as, the increasing foreign competition. By 1995, the decrease in the value of the Canadian dollar allowed some relief to the industry by making imports more expensive. Despite many Canadian furniture manufactures having closed, the Atherley Furniture Company was one of the few who chose to use this opportunity to reposition themselves and improve efficiency. Regardless, the company remains suffering due to their inability to exploit opportunities and change weaknesses into strengths. SWOT Analysis Strengths | Weaknesses | * Skilled and loyal workforce * “Caledonia” model requires less labour therefore has lower production costs * Ability to modify...
Words: 1585 - Pages: 7
...STEEL DIVISION | FY 10 | FY 09 | % Change | Hot Metal | 7.23 | 6.25 | 16 | Crude Steel | 6.56 | 5.65 | 16 | Saleable Steel | 6.44 | 5.37 | 20 | Sales | 6.17 | 5.23 | 18 | PRODUCTION | Best ever | FY 10 | Previous Best | 'G' Blast Furnace | Hot metal production | 2.08 | 2.04 – FY 09 | LD shop #2 & Slab Caster | Slab production | 3.70 | 3.51 – FY 09 | LD shop #1 | Billet production | 2.85 | 2.105 – FY 09 | Sinter Plant | Sinter productionSolid waste utilization | 7.6690% | 6.53 – FY 0989.61% | Hot Strip Mill | Production | 3.65 | 3.27 – FY 08 | Cold Rolling Mill | Production | 1.563 | 1.534 – FY 08 | New Bar Mill | Production | 0.672 | 0.612 – FY 09 | Wire Rod Mill | Production | 0.419 | 0.416 – FY 06 | Merchant Mill | Production | 0.341 | 0.328 – FY 09 | 2. FERRO ALLOYS & MINERALS DIVISION 3 Tubes division 4. Bearings division Tata Steel Europe (TSE) | FY 10 | FY 09 | Turnover | 65,843 | 109,570 | Profit Before Tax (PBT) | (7,712) | (184) | Profit after tax (PAT) | (7,504) | 138 | | FY 10 | FY 09 | Change % | Crude steel production | 14.4 | 15.8 | (9%) | Deliveries | 14.2 | 19.0 | (25%) | | FY 10 | FY 09 | Change % | Strip Products | 6.19 | 6.82 | (9%) | Long Products | 4.41 | 6.57 | (33%) | Distribution & Building systems | 3.58 | 5.40 | (34%) | Aluminum | - | 0.21 | - | Total | 14.17 | 19.00 | (25%) | | FY 10 | FY 09 | Change % | UK | 3.85 | 4.85 | (21%) | Europe(excluding...
Words: 575 - Pages: 3
...Top of Form 1 . Purely competitive firms increase total revenue by • A. increasing production • B. decreasing production • C. increasing price • D. decreasing price Bottom of Form Correct : To increase revenue, firms look to increase price or quantity, as price multiplied by quantity equals total revenue. Purely competitive firms can sell as much as they want at the market price. Adding additional units of the product does not result in a change in the market price. Therefore, since purely competitive firms do not influence price, they increase total revenue by increasing quantity. Materials • Profit-Maximizing Case Top of Form 2 . What are two ways for a competitive firm to determine the optimal level of production, that is, the level of production that will maximize profit or minimize losses? • A. Comparing total revenue to total cost or marginal revenue to marginal costs • B. Comparing average revenue to average costs or marginal revenue to marginal costs • C. Comparing average variable costs to price or marginal revenue to price • D. Comparing total revenue to average variable costs or price to average variable costs Bottom of Form Correct : A firm can look at two factors when considering whether it is maximizing profit or minimizing losses. First, it can find the maximum difference between total revenue and total cost. Second, a firm can look at the additional revenue gained from selling one more unit and at the additional...
Words: 2269 - Pages: 10
...PROFIT AND LOSS PROFIT AND LOSS LUDWIG VON MISES Ludwig von Mises Institute AUBURN, A L A B A M A Copyright © 2008 Ludwig von Mises Institute Ludwig von Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832 U.S.A. www.mises.org ISBN: 978-1-933550-36-7 CONTENTS A. The Economic Nature of Profit and Loss . . . . . . . . . 7 1. The Emergence of Profit and Loss . . . . . . . . . . . . 7 2. The Distinction Between Profits and Other Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3. Non-Profit Conduct of Affairs . . . . . . . . . . . . . . . 11 4. The Ballot of the Market . . . . . . . . . . . . . . . . . . . . 13 5. The Social Function of Profit and Loss . . . . . . . . 19 6. Profit and Loss in the Progressing and in the Retrogressing Economy . . . . . . . . . . . . . . . . . . 24 7. The Computation of Profit and Loss . . . . . . . . . . 26 B. The Condemnation of Profit . . . . . . . . . . . . . . . . . . . 33 1. 2. 3. 4. 5. 6. 7. Economics and the Abolition of Profit . . . . . . . . . 33 The Consequences of the Abolition of Profit . . . . 34 The Antiprofit Arguments . . . . . . . . . . . . . . . . . . . 37 The Equality Argument . . . . . . . . . . . . . . . . . . . . . 40 Communism and Poverty . . . . . . . . . . . . . . . . . . . 43 The Moral Condemnation of the Profit Motive . . 47 The Static Mentality . . . . . . . . . . . . . . . . . . . . . . . 50 C. The Alternative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 5 A...
Words: 12596 - Pages: 51
...102), Merton was conflicted with how to manage production and improve financial results. The executive team offered many different options to improve performance, but many were conflicted. For example, the sales manager suggested cancelling all production of model 101 trucks, whereas the controller suggested increasing model 101 production and curtailing model 102 production. To determine the best course of action for the company, an in-depth analysis of their current practices and optimal position is required. Currently, Merton produces 1,000 of Model 101 trucks and 1,500 of Model 102 trucks. The company is constrained by monthly machine hours available in their production facilities for each activity (SEE EXHIBIT 1). The contribution margins for each model are $3,000 for Model 101, $5,000 for Model 102 (SEE EXHIBIT 2). Each model provides contribution margin, so increasing production in any capacity should increase overall profits. However, the decision on which product to increase production of has caused some internal conflict because of the allocation of shared resources. At the moment, the production facilities are maximizing the engine assembly capacity. This is a shared resource by both Model 101 production and Model 102 production. On one hand, Model 101 production has lower contribution margin ($3,000), but less engine assembly capacity utilization (1.0 machine hours per truck). On the other hand, model 102 production has higher contribution margin ($5,000), but greater...
Words: 982 - Pages: 4
...sideburst”. Also, the flexibility in designs and a wide array of choices has helped ECW to cater to the ever-changing consumer preferences. Currently, Country Pitchers (CP) is the primary seller of ECW featuring the hand painted design but also, the least profitable one. Due to the growing interest of some of the firm’s primary sellers in CP, the demand of CP for the next year is forecasted at 3000 pieces. The availability of Elizabeth limits the process that ECW currently uses in the CP production, thereby limiting the current CP production rate to 1996 pieces a year (Exhibit 1.1). Also, out of the two kilns being used (each having a capacity of 12 CPs); one is available for 225 days in CP production, and the other for 275 days in CP production. Digitally designed/ screen printed decals can be used to replace Elizabeth’s hand painted designs. By using Decals, the firm can, not only increase its capacity (Exhibit 1.1) but also earn more profits by making use of Elizabeth’s time in marketing and production of higher margin items like Butter Churn Lamps that feature unique designs. By producing 2 or 3 additional Butter Churn lamps per week, the firm has the potential to earn extra $27300 (Exhibit 1.2). To utilise Elizabeth's time efficiently, the firm may consider purchasing the Decal equipment, an additional kiln and training a replacement worker for...
Words: 1885 - Pages: 8
...other and how they are used by a company in profit maximization. By factoring, analyzing and comparing the various data on revenue and cost, a company can use a marginal analysis to determine the best direction to maximize profits. A marginal analysis is the “comparisons of marginal benefits and marginal costs, usually for decision making” (McConnell, 2011, p. 6). A. There are two methods to describe profit maximization. Further details of both methods and how each are used to determine profit maximization are as followed: 1. One method of understanding profit maximization is by using the relationship of total revenue and total cost. Total revenue is the total income that a company receives from a product or service. The price multiplied by the quantity of the product or service equates to the total revenue. Total cost is the total expense or cost to a company to produce a product or provide a service. Profit is determined by subtracting the total cost from the total revenue. Initially, as production or quantity increases, profit increases as well. There is a point, however, where the profit will maximize and then begin to diminish as the unit quantity increases. This point is where the greatest profit is realized in relation to the total revenue and total cost. This quantity is where a company would set the production level for a profit maximization plan. (McConnell, 2011, p. 167-168) 2. The other method of understanding profit maximization takes a look at the relationship...
Words: 863 - Pages: 4
...the national market, the production capacity was doubled to 240 tonnes, but only 50% of that capacity is currently being utilized for the MKG brand. In the past 13 years, the MKG brand has grown by only 9.1%, even though the production capacity increased by 100%. In the first 10 years after the increase in production capacity, the sales turnover increased year over year, but started following a declining trend after that. In the previous year, 1986-87, the sales turnover under the MKG brand was ₨ 2.6 crores; a drop of 13.12% from 1983-84. The drop in sales can be directly attributed to two reasons: 1) Rising unorganized competition – The unorganized sector evaded excise duties and sales taxes and had no onus on quality, which helped them price their biscuits much lower than MKG. In the previous year, MKG paid taxes of Rs 4163 per tonne of biscuits sold. 2) Rising organized competition – Due to increased organized sector manufacturing units, MKG could not increase its prices to compensate for rising costs of labor and material, which led to declining margins. Apart from the above, there were various indirect reasons which resulted in MKG not being able to sustain competitive pressure: 1) Raw Material wastage – In 1986, MKG used 1100 kg of raw materials to produce 1000 kg of biscuits, whereas in comparison, the market leader used only 1030 kg. 2) Casual labor absenteeism – The casual labor absenteeism was 50% which led to highly uneven production. The daily wage rate offered...
Words: 2320 - Pages: 10
...than is reflected in their current accounting system. Actual gross margins will change noticeably with an Activities Based Costing system. Even operating at full capacity, Flow Controllers at the current price contribute only a .9% profit margin. Wilkerson Company managers have several options to choose from to change their company’s profitability. They have the opportunity to raise the price of Flow Controllers. They may choose to drop this product line completely, or raise the price significantly to achieve their target of 35% profit margin. What Wilkerson Company management views as an inexpensive way to allocate overhead costs is actually a very costly way, because it does not accurately reflect the profitability of their products. Attributing 300% overhead cost to each product is an inappropriate cost allocating method. Using their current method overhead activity is not in proportion to true variable costs. Wilkerson Company also has an opportunity to reduce costs and increase profitability by using unused capacity to reduce variable costs per unit. ------------------------------------------------- From Exhibit 1 Variable Costs are as follows: Machine-related expenses $336,000 Setup Labor $40,000 Receiving and Production Control $180,000 Engineering (NOT a variable cost/unit) $100,000 Packaging and Shipping $150,000 ------------------------------------------------- Total Manufacturing Overhead (Variable Costs including Engineering): $806,000 ...
Words: 1381 - Pages: 6
