Operational Decisions

Topics: Revenue, Variable cost, Generally Accepted Accounting Principles Pages: 4 (935 words) Published: August 2, 2012
Operational Decisions
Strayer University
July 19, 2012

Assume you have been hired as a managing consultant be a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days/month). The daily wage (per worker) is $70, and the price of the firm’s output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm’s fixed cost is “high enough” so that the firm’s total costs exceed its total revenue. The marginal cost of the last unit is $30. 1. Briefly describe the details of the fictitious business that you created for this assignment. The company I was hired for as a managing consultant, Press Body Nutrition is a privately owned company that currently makes the highest quality of protein powder for athletes pro level and none pro worldwide. At this moment, my client has produced 6,000 units of protein powder per month, and employs about 100 employees. The factory operates for 20 days a month for a typical 8 hour work day. Every Unit of protein powder that is producing the company gets $32 and has a variable cost of $2,000 per month. Employees at Press Body Nutrition currently make approximately $70 a day.

2. Assess the current environment scan factors. Determine the factors that will have the greatest impact on plant operations and management’s decision to continue or discontinue operations.

Press Body Nutrition has many current environmental factors that will have great impact on plant operations and the management’s decision to continue or discontinue operations. Factors such as; Income and Employment, Price Levels are all factors that impact operations, Economic Growth and Development, Demand and Supply, and Marginal and Total Utility.

Income and Employments - The company has a very small work force being that it’s a brand new company and...
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