Premium Essay

Hbs Case Study Fineprint

In: Business and Management

Submitted By fspelzhausen
Words 536
Pages 3
1. FinePrint currently is operating at around full capacity: 150,000 brochures. Should Johnson accept the special order? See Answer Below Regular Ops Difference Special Order 25,000 Option 1 Option 2 Option 1 Option 2

Revenues $25,500 $23,750 -$1,750 $4,250 $2,500 Variable Cost
Direct Material 6,000 6,000 1,000 1,000
Direct Labor 1,500 1,500 250 250
Manufacturing Overhead 1,500 1,500 250 250
Marketing 1,500 1,250 250 250 0
Total VC 10,500 10,250 250 1,750 1,000 Contribution Margin 15,000 13,500 -1,500 2,500 1,000 Fixed Costs
Direct labor 3,000 3,000
Manufacturing Overhead 3,375 3,375
Marketing 1,875 1,875
Corporate 3,750 3,750
Total FC 12,000 12,000 -1500 No, the special order should not be accepted. It is clear that the special order would negatively impact revenue by $1500.

2. Assuming FinePrint is operating at capacity of 150,000 brochures and there is no special order from Abbie, should FinePrint outsource 30,000 brochures to Ernest? Why or why not?

Regular Ops Difference Outsourcing 30,000 Option 1 Option 2 Option 1 Option 2

Revenues $25,500 $25,500 $5,100 $5,100 Variable Cost
Direct Material 6,000 4,800 1,200 1,000 1,000
Direct Labor 1,500 1,200 300 250 250
Manufacturing Overhead 1,500 1,200 300 250 250
Marketing 1,500 1,500 0 250 0
Outsource Cost 0 2,400 -2,400 0 2,400
Total VC 10,500 11,100 -600 2,100 2,700...

Similar Documents