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Kanthal Case Study Solutions
INTRODUCTION:
Kanthal is company that specializes in the production and sales of electrical resistance heating elements. Kanthal has about 10,000 customers and they produce about 15,000 items. The company consists of three divisions and these three divisions are as follows:
1)Kanthal Heating Technology - 25% global market share
2)Kanthal Furnace Products - 40% global market share
3)Kanthal Bimetals - Manufacturer of one of the few fully integrated temperature control devices
Mr. Ridderstrale, who became the President of the company in 1985, developed and implemented a plan that has involved completely
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Second, the manufacturing order costs for non-stocked items was calculated by dividing total manufacturing order costs for non-stocked items by the number of orders for non-stocked products. Non-stocked products have additional costs associated with processing orders that went above and beyond the costs associated with a stocked product. The third step involved determining what the S"A allocation factor would be for calculating the S"A volume related costs. This allocation factor would then be applied to manufacturing COGS. The fourth and final step involved the calculation of the operating profit based on backing out volume related costs from sales revenues followed by deducting S"A and manufacturing order costs from the resulting gross margin to arrive at a operating profit.
Question 3:
Consider a product line with 50% gross margins (after subtracting volume-related expenses from prices). The cost for handling an individual customer order is SEK 750, and the extra cost to handle a production order for a non-stocked item is SEK 2,250.
a). Compare the operating profits and profit margins of two small orders, both for SEK 2,000. One order is for a stocked item, and the other order is for a non-stocked item.
b).Compare the operating profits and profit margins for two large customers.
Customers A " B both purchased SEK 160,000 worth of products this year.
Customer A placed just three orders, for three
1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?
1. For the year-end December 31, 2007, financial statements, what amount should M record as a liability?
330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.
1. In your own words, can you describe the Wise concept of “public service culture”? What does the author mean by that term? What assumptions about human nature does her motivational concept rest on? Do you believe these are valid assumptions?
6. A product’s margin is determined by subtracting its manufacturing costs (labor and material) from its price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind the Customer Buying Criteria, how would you increase margins for a Low End product? How would you increase margins for a High End product? Hint: The criteria can be found in the Capstone Courier Market Segment Analyses.
The current capital budgeting system is a priority assessment. First, individuals submitted requests to their
Auditors should insist that engagement letters identify third parties, so that if there is an issue of fraud they know who they are liable for. It is important that they are familiar with the third party companies, because they are essentially representing them and supporting their investments with their audit report.
1Analysts typically forecast EPS going out for 5 years, which is about as far as analysts think forecasts are useful for most investors. For purposes of the DCF model, it would be better to have forecasts of the average growth rate in dividends going on out to perpetuity. However, (1) the analysts’ forecasts generally do represent their best guesses for the long-run growth rate, (2) in the long run,
“It’s amazing how much difference there is in the way proposals are presented at two different firms,” said John Woods to his assistant, Pete Madsen, as he pointed to the stack of capital investment proposals piled on his desk. “We sure have our work cut out for us, Pete. I need you to collect some data for me as soon as possible. ”
a). Compare the operating profits and profit margins of two small orders, both for SEK 2,000. One order is for a stocked item, and the other order is for a non-stocked item.