Ask Question, Ask an Expert


Ask Business Economics Expert

ClearHear is a manufacturer of cell phones, where Kendra Sherman works as a business development specialist. Kendra anxiously awaits her appointment with Lisa Norman, the production manager for ClearHear. Kendra has secured an order for 100,000 cell phones, virtually identical to ClearHear's Alpha model which will support a promotion that a major chain, Big Box, is running with a telephone service provider. The delivery date is in 90 days. Lisa is interested, in part, because she has an excess capacity of 70,000 cell phone units over the next three months, and part of her bonus is based on running the factory at capacity. However, the larger part of her bonus is based on factory total profitability. Big Box, however, will not pay over $15 for each of the cell phones, which are based on the $20 per unit Alpha model, lessening Kendra's enthusiasm.

ClearHear runs two production lines at their factory. The other produces the Beta model which has more features. It sells for $30 but also costs more to produce. Lisa knows that she could switch production of 30,000 units from the Beta model to Alpha to complete the order. Therefore, just last week an Original Equipment Manufacturer (OEM), which has extensive experience manufacturing cell phones for other brands and has won several quality awards for its manufacturing processes, showed Lisa a prototype of the Alpha unit. The OEM sought to convince Lisa that, not only could they produce up to 100,000 units of Alpha on short notice but the performance of the cell phone would be identical to ClearHear's product. The price would be a nonnegotiable $14 per unit.

After the meeting Lisa reviewed the last month's unit profitability report which revealed the following:

Table 1.

Unit Profitability Report

Alpha model
Beta model
Price per unit
Variable cost per unit
Fixed overhead

Note. All unit prices are in dollars.

Unfortunately, while unit profits were good and cost controls met factory standards, the underutilization of capacity deprived Lisa and the factory of profits that could have been earned on an additional 70,000 units.  Kendra wants to know if she should accept the order from Big Box.

As Lisa Norman thinks about how to proceed, she studies ClearHear\\\'s statement of values. It includes:

  • Keep our employees working
  • Provide our customers with products on time and that reliably meet or exceed their expectations
  • Treat our business partners the same as we want to be treated

 Cost Scenario

In this assignment, make a decision whether to accept an order for a product which requires displacing another product from production. This employs contribution analysis, opportunity cost, and cost concepts. The University of Phoenix Material - ClearHear Scenario provides a problem statement, opportunities, and end state goals.

Identify alternative solutions to meet the end-state goals

Analyze and evaluate the alternatives that you identified

Perform risk analysis to identify potential risks and negative consequences of the alternative solutions

Make a recommendation of the best alternative solution and describe how it best meets the desired end state.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922583

Have any Question? 

Related Questions in Business Economics

Kat von d also known as katherine von drachenberg is an

Kat Von D, also known as Katherine von Drachenberg, is an American tattoo artist, model, musician, entrepreneur, and television personality. She is best known for her work as a tattoo artist on the TLC reality television ...

The current structure of healthcare coverage in the united

The current structure of healthcare coverage in the United States has a combination of employer-based coverage and public program (e.g., Medicare, Medicaid) coverage, with a large uninsured population. If a single-payer ...

During the year belyk paving co had sales of 2383000 cost

During the year, Belyk Paving Co. had sales of $2,383,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,442,000, $436,700, and $491,700, respectively. In addition, the company ...

Bob consumes only apples and bananas he always prefers more

Bob consumes only apples and bananas. He always prefers more apples to fewer, but he gets tired of bananas. If he consumes fewer than 29 bananas per week, he thinks that 1 banana is a perfect substitute for 1 apple. But ...

An increase in planned savings all else held constant will

An increase in planned savings, all else held constant, will always result in a. a slowdown in the circular flow of income b. an increase in the circular flow c. an increase in planned investment spending d. an increase ...

During a recession the manager for best buys wants to

During a recession the manager for Best Buys wants to increase sales volumes of both flat screen TVs and DVD players to help that department reach its sales goal; however, a recent market research department analysis sho ...

Quantitative problem jenna is a single taxpayer with no

Quantitative Problem: Jenna is a single taxpayer with no dependents so she qualifies for one personal exemption. During 2013, she earned wages of $122,000. She doesn't itemize deductions, so she will take the standard de ...

Discussion questionunderstanding business research methods

Discussion Question 'Understanding Business Research Methods is essential for all successful business managers whether in profit or not for profit organizations.' There is no 'right' answer in relation to the quote above ...

Most available studies of the effects of medical ccare on

Most available studies of the effects of medical ccare on health outcomes use mortality as the measure of health. If there are other dimensions to health in addition to living versus dying that remain unmeasured (such as ...

Effect of bank strategies on bank ratings a bank has asked

Effect of Bank Strategies on Bank Ratings A bank has asked you to assess various strategies it is considering and explain how they could affect its regulatory review. Regulatory reviews include an assessment of capital, ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate