Hospital Supply Case Study
Table of Contents I. INTRODUCTION 2 II. STATEMENT OF PROBLEM 2 III. OBJECTIVES 3 IV. SCENARIOS 3 Question 1 5 Question 2 7 Question 3 10 Question 4 12 Question 5 13 Question 6 14 Question 7 16 V. CONCLUSION 18 Bibliography 19
INTRODUCTION
The case is about manufacturing company, Hospital Supply, Inc., that produced hydraulic hoists for the local market. The hydraulic hoist is useful to the hospital for moving bedridden patients. Most of sales made to local hospitals. Significant to activity of sales and production of hydraulic hoist, there are costs incurred due to the consumption of resources. Presented in Exhibit 1 are the costs of manufacturing and marketing hydraulic hoists at the company’s normal volume of 3,000 units per month:
Exhibit 1 – Cost per Unit for Hydraulic Hoists.
Cost per Unit for Hydraulic Hoists.
Unit manufacturing cost: Variable materials $550 Variable labor $825 Variable overhead $420 Fixed overhead $660 Total unit manufacturing cost $2455
Unit marketing costs: Variable $275 Fixed $770 Total unit marketing costs $1045
Total unit cost $3500
STATEMENT OF PROBLEM
The overall case is about how Hospital Supply, Inc. can optimize its profit under various situations. Since profit results from the exceeds amount of sales income compare to the costs, therefore understanding the changes in sales volume, selling price and cost are very important to facilitate in making right decision.
OBJECTIVES
Referring to the scenarios given below, this study helps to achieve the following objectives: 1. To understand the relationship between sales components and costs that will affect the Hospital Supply, Inc.’s profit. 2. To understand the significant of breakeven point that will lead Hospital Supply, Inc. to achieve profitable performance. 3. To
INTRODUCTION
The case is about manufacturing company, Hospital Supply, Inc., that produced hydraulic hoists for the local market. The hydraulic hoist is useful to the hospital for moving bedridden patients. Most of sales made to local hospitals. Significant to activity of sales and production of hydraulic hoist, there are costs incurred due to the consumption of resources. Presented in Exhibit 1 are the costs of manufacturing and marketing hydraulic hoists at the company’s normal volume of 3,000 units per month:
Exhibit 1 – Cost per Unit for Hydraulic Hoists.
Cost per Unit for Hydraulic Hoists.
Unit manufacturing cost: Variable materials $550 Variable labor $825 Variable overhead $420 Fixed overhead $660 Total unit manufacturing cost $2455
Unit marketing costs: Variable $275 Fixed $770 Total unit marketing costs $1045
Total unit cost $3500
STATEMENT OF PROBLEM
The overall case is about how Hospital Supply, Inc. can optimize its profit under various situations. Since profit results from the exceeds amount of sales income compare to the costs, therefore understanding the changes in sales volume, selling price and cost are very important to facilitate in making right decision.
OBJECTIVES
Referring to the scenarios given below, this study helps to achieve the following objectives: 1. To understand the relationship between sales components and costs that will affect the Hospital Supply, Inc.’s profit. 2. To understand the significant of breakeven point that will lead Hospital Supply, Inc. to achieve profitable performance. 3. To
Bibliography: 1. Anthony, H. F., & K, M. (2007). Accounting. In Text & Cases (pp. 474-501). Singapore: McGraw Hill. 2. Cost Behavior. (n.d.). Retrieved Sept 30, 2010, from CliffsNotes.com.: http://www.cliffsnotes.com/study_guide/topicArticleId-21248,articleId-21228.html 3 4. Marlena Benardska, P. (. (3/1997). THE POSSIBILITIES OF CVP IN THE HOTEL AND CATERING INDUSTRY. The Tourist Review, 47-54. 5. Philips, P. A. (Vol. 6 No. 3, 1994,). International Journal of Contemporary Hospitality Management,. Welsh Hotel: Cost-Volume-Profit Analysis and Uncertainty, pp. 31-36 © MCB University Press Limited, 0959-6119. [4] Anthony, H. F., & K, M. (2007). Accounting. In Text & Cases (pp. 474-501). Singapore: McGraw Hill. [5] Cost Behavior. (n.d.). Retrieved Sept 30, 2010, from CliffsNotes.com.: http://www.cliffsnotes.com/study_guide/topicArticleId-21248,articleId-21228.html [6] Cost Behavior [7] Krajewski, R. L., & Malhotra. (2010). Operation Management. In Processes and Supply Chain (pp. 54-56). New Jersey: Pearson. [8] Marlena Benardska, P. (. (3/1997). THE POSSIBILITIES OF CVP IN THE HOTEL AND CATERING INDUSTRY. The Tourist Review, 47-54.