Hau Lee Furniture, Inc., spends 50%of its sales dollars in the supply chain and finds its current profit of $8,000 inadequate. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Hau would like to improve the profit line to $13,000 so he can obtain the bank's approval for the loan.
Current Situation Percent of sales
Sales 80,000
Cost of material 40,000 (50%)
Production cost 20,000 (25%)
Fixed cost 12,000 (15%)
Profit 8,000 (10%)
a) What percentage improvement is needed in the supply chain strategy for profit to improve to $13,000? What is the cost of material with a $13,000 profit?
A decrease of _% in material (supply-chain) costs is required to yield a profit of $13,000, for a new material cost of $_. (Enter your response for the percentage decrease to one decimal place and enter your response for the new material cost as a whole number.)
b) What percentage improvement is needed in the sales strategy for profit to improve to $13,000? What must sales be for profit to improve to $13,000?
An increase of _% in sales is required to yield a profit of $13,000, for a new new level of sales of $_. (Enter your response for the percentage increase to one decimal place and enter your response for the new sales as a whole number.)
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