Following a Strategy of Product Differentiation, Rumsen Tools Corp Rumsen Produces No Defective Units but It Wants to Reduce

question 59

Multiple Choice

Following a strategy of product differentiation, Rumsen Tools Corp. makes a hand sander sold in hardware stores. Rumsen presents the following data for the years 2011 and 2012: $\begin{array} { | l | r | r | } \hline & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \\\hline \text { Units started } & \$ 11,000 & \$ 11,500 \\\hline \text { Selling price } & \$ 200 & \$ 210 \\\hline \text { Direct materials cost per square foot } & \$ 40,000 & \$ 40,750 \\\hline \text { Direct materials square feet } & 7 & 10 \\\hline \text { Manufacturing capacity (units) } & 13,500 & 13,500 \\\hline \text { Total conversion costs } & \$ 3,500,000 & \$ 377,500 \\\hline \text { Conversion costs per unit of capacity } & \$ 30 & \$ 32 \\\hline \text { Selling and customer service capacity (mumber of customers) } & 20 & 19 \\\hline \text { Total selling and customer service costs } & \$ 80,000 & \$ 80,625 \\\hline \text { Cost per customer of selling and customer service capacity } & \$ 4,000 & \$ 4,125 \\\hline\end{array}$ Rumsen produces no defective units but it wants to reduce the direct materials usage per hand sanderin 2012. Manufacturing conversion costs in each year depend upon production capacity defined in terms of the number of units that can be produced. Selling and customer-service costs depend upon the number of customers that the customer and service functions are designed to support. Rumsen had 33 customers in 2011 and 35 customers in 2011. The industry market size for hand sanders had increased by 7% from 2011 to 2012. Which of the following is a measure of the customer perspective?

• A)Operating income growth from charging higher profit margins for Product X2GB.
• B)Yield.
• C)Order delivery time.
• D)Improving manufacturing processes.
• E)Market share in the Product X2GB market.

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Definitions:

Cross-Functional Team

A team comprised of members from different departments or functional areas within an organization, brought together to achieve a specific goal or work on a specific project.

Cross-Functional Communication

This refers to the exchange of information and collaboration between different departments or disciplines within an organization to achieve a common goal.

Cross-Functional Team

A group of individuals with different expertise and from various departments within an organization, working together towards a common goal.

Contextual Influences

External factors or circumstances that surround an individual or organization, significantly impacting perceptions, behaviors, and decision-making processes.