Based on the information presented in the scenario/case survey discuss Albatross Anchor’s fight in relation to ( delight address all points in the below list and supply support for your decisions ) : 1. Cost

a ) Cost of Production: Fabrication costs are $ 8. 00 per lb for the Albatross mushroom/bell ground tackle and $ 11. 00 per lb for Albatross snag hook ground tackle. Albatross sells the ground tackles for the same monetary value as rivals. However. Albatross can hold a 35 % less net income border. ( Russell & A ; Taylor. 2011. p. 230 ) .

B ) Economies of Scale in material buying: company that achieves economic systems of graduated table lowers the mean cost per unit through increased production since fixed costs are shared over an increased figure of goods ( Hindle. 2008 ) . As a company grows and production units addition. a company will hold a better opportunity to diminish its costs. Harmonizing to theory. economic growing may be achieved when economic systems of graduated table are realized ( Heakal. 2009 ) . There are two types of economic systems of graduated table – external and internal. External are economic systems that benefit a house because of the manner in which its industry is organized. Internal are cost nest eggs that accrue to a steadfast regardless of the industry in which it operates ( Hindle. 2008 ) .

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degree Celsius ) Cost of Raw Materials Siting Idle in the Warehouse:
vitamin D ) Cost of Finished Goods Siting Idle in the Warehouse:
2. Speed of fabricating procedure from order to complete merchandise. 3. Flexibility in make fulling order ( s )
4. Technology
5. Capacity and installations
6. Service to clients
Question Two
There are many ways that mushroom/bell ground tackles may be manufactured. Albatross Anchor is sing two new fabrication procedures ( Process A and Process B ) to cut down costs. Analysis of the information below will assist find which procedure has the lowest breakeven point ( this validates the procedure is more cost effectual ) . For each procedure the undermentioned fixed costs and variable costs are identified below: Anchor and ProcessProcess AProcess B






Sale monetary value per anchor $ 45. 00 $ 45. 00
Entire Fixed cost $ 650. 000. 00 $ 950. 000. 00
Variable cost per anchor $ 36. 00 $ 29. 99

Based on the information in the tabular array above complete the tabular array below:

Anchor and ProcessProcess AProcess B
( a ) Fixed costs per ground tackle
( B ) The entire figure of ground tackles to achieve
break–even point for Process A and Process B


( degree Celsius ) Based on your computations which Process ( A or B ) that you would urge for acceptance ( you can choose merely one ) . Please do certain to explicate how you arrived at your decision. Decision

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