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

question 38

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 financial perspective?

• A)order delivery time.
• B)re-engineering process.
• C)operating income growth from charging higher profit margins for hand sanders.
• D)improving manufacturing processes.
• E)market share in the hand sander market.

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Definitions:

Holistic Perspective

An approach that considers a system or entity as a whole, integrating all parts and aspects instead of focusing on individual components.

Global Supply Chains

Supply chain operations that involve production and delivery activities spread over different countries, offering advantages like cost reduction and access to new markets but also presenting complex challenges.

Transit Times

The duration it takes for goods to be transported from one point to another, often considered in the selection of shipping methods.