Electronic Component Sector Case Study

794 Words4 Pages

Société Générale
AGENDA
Introduction to the case
Questions
Evaluation of the cost system
Correction
Operating income
Suggestions
Evaluation of the exceptional order possibility
Solutions
Conclusion
INTROCTION TO THE CASE
Company active in the electronic components sector:
Main product: Cathodes ray tubes

Possible application:
INTROCTION TO THE CASE
Production of cathodes ray tubes:
Components bought outside:
Glass tubes
Electron guns
Visual control of the tubes
Using a special machine to glue guns
INTROCTION TO THE CASE
2 products to examine:
Tube of 6 inch in diagonal
Tube of 10 inch in diagonal
Total average unit cost for the past 18 months:
Fabrication
Working schedule:
8 hours per day
20 days per month
11 months per year
Cost of labor (EUR/unit) …show more content…

Corrected total unit cost
Monthly production:
6-inch model: 1,920 units
10-inch model: 1,280 units
Total: 3,200 units

Direct and indirect variable costs
Depreciations
General Expenses
Financial costs
Overcapacity costs
Corrected total unit cost
Question 3
Calculate the monthly average operating income for the last 18 months.
Operating Income
Question 4
Which measures could we recommend to the company in order to improve the profit levels obtained in the income statement?

QUESTION 4
Observation:
Both models create losses when they are sold in quantities greater than 99 pieces per order.

Propositions:
Increase production level (Better use of the capacity),
Increase the selling prices for big quantities
Question 5
Société Générale received an exceptional order for 1’060 units of 6-inch tubes for a month, in addition to its regular production. Because he is running out of time, the client is ready to pay a unit price of € 88. Determine whether Société Générale should accept this order.
Additional order
Monthly production:
6-inch model: 2,980 units
10-inch model : 1,280 units
Total: 4,260 units

SOCIETE GENERALE: Additional

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