Homework – Birch Paper Company

1) Fill in the missing prices and costs on the “Diagram of the alternatives” and “Costs of the alternatives” which are attached.

On the “Diagram of the alternatives”, fill in the amounts indicated in the nine dotted ovals. Some amounts may be easy to find in the case, some will need to be computed from case information, and some you will not be able to ascertain from case data; for the latter, write “don’t know”.

On the “Costs of the alternatives”, complete the table using relevant amounts from the “Diagram of the alternatives”, and compute the net cost to Birch for each of the three choices.

NOTE: In the case, the term “out-of-pocket costs” means variable costs.

2) On your completed “Diagram of the alternatives”, indicate which bid Mr. Kenton (Northern Division) will accept (based purely on economic considerations) by circling it and labeling it accordingly.

3) On your completed “Costs of the alternatives”, indicate which alternative is in the best interest of Birch Paper as a whole (based purely on economic considerations) by circling it and labeling it accordingly.

Section: D

Name: Amanda Wang Section: D

Name: Amanda Wang 9)
9)
8)
8)
6)
6)
5)
5)
4)
4)
2)
2)
1)
1)
7)
7)
3)
3)
280
120
280
120
90 don’t know
90
don’t know
30
25
30
25
480
480
TP: $ (market price)
TP: $ (full cost)
Price: $
Price: $
Price: $
VC: $
NORTHERN
(William Kenton)

VC = $
THOMPSON
(James Brunner)

VC = $
FC = $
SOUTHERN

VC = $
FC = $

EIRE PAPERS

Price: $
VC: $

WEST PAPER COMPANY

BIRCH PAPER COMPANY
(liner & CM)
(print, cut & shape)
(outside liner)
(print outside liner)
TP: $ (market price)
TP: $ (full cost)
Price: $
Price: $
Price: $
VC: $
NORTHERN