Kelchner Corporation has provided the following contribution format income statement. Assume that the following information is w
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Answer:
A)
Sup 1 $7,415,250
Sup 2 $7,394,080
I will pick supplier 2 as their total cost is lower.
With the assumption of point b:
Supplier 1 $ 7,412,612
Supplier 2 $ 7,419,296
Explanation:
We must use the values for 1 to 1,499 units as we are constrained to a maximum of 1,100 lot size.
Weight of the lot:
1,100 x 25 pounds = 27,500 we do not achieve truckload
So we use the 1.20 per ton-mile
27,500 / 2,000 = 13.75 tons
13.75 tons x $1.20 each x 100 miles x 12 per year = $23,760
13.75 tons x $1.20 each x 120 miles x 12 per year = $19,800
Order cost $230 x 12 per year = $ 2,760
Truckload: 42,000 / 25 = 1,680 units
new logistic cost:
13,200 / 1,680 = 7.85
This will mean 7 full travels and then another travel with less than full-load with As we cannot send "0.85" of a full load truck
13,200 - 1,680 x 7 = 1,440 units
Logistic cost:
42,000 / 2,000 x $0.80 each x 100 miles x 7 travels
+ 1,440 x 25 / 2000 x $1.20 each x 100 miles = 13920
42,000 / 2,000 x $0.80 each x 120 miles x 7 travels
+ 1,440 x 25 / 2000 x $1.20 each x 120 miles = 16,704
Order Cost: 8 orders x 230 = $1,840
Holding Cost: 1,680 untis / 2 x $551 or $552 x 20%