Hau Lee Furniture, Inc., spends 45% of its sales dollars in the supply chain and finds its current profit of $35,000 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 $40,000 so he can obtain the bank's approval for the loan. Current Situation Sales $140,000 Cost of material $63,000 (45%) Production costs $35,000 (25%) Fixed cost $7,000 (5%) Profit $35,000 (25%) a) What percentage improvement is needed in the supply chain strategy for profit to improve to $40,000? What is the cost of material with a $40,000 profit? A decrease of nothing% in material (supply-chain) costs is required to yield a profit of $40,000, for a new material cost of $ nothing. (Enter your response for the percentage decrease to one decimal place and enter your response for the new material cost as a whole number.)
