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$22$ of $26$ Strategic planning $$ part $2$

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Question $5$ of $6$

Question

$05/06$

An option to repurpose the main product of Telford Engineering can now be explored. This option is to construct steel reinforcement frames for factory construction in countries vulnerable to earthquakes. This would mean that all current spare capacity could be committed to this additional product. This will increase the current sales value by $10\%$ and the materials costs will remain at $30\%$ of sales for this additional output.$$

Calculate the effect on net profit $($to the nearest $M$000).$ For your answer only provide the first three numbers and do not include any symbols, for example, $"543".$

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Question $6$ of $6$

Question

$06/06$

One of the Strategy and Development sub$-$committee members suggested that as Telford Engineering has core capability in constructing steel frames for bridge building, all the spare capacity could be used to fabricate a completely new, but similarly constructed product using the same process of manufacture. The proposal is to start producing $$booms$$ or $$jibs$$ for large crane manufacturers. This would cost $$240,000$ in additional development costs to convert and create spare capacity, but will open a completely new higher value market for Telford Engineering, increasing the current sales value by $20\%.$ The higher sales margin would mean that the total cost of materials for this product will only be $25\%$ of sales.$$

Calculate the effect on net profit $($to the nearest $M$000).$ For your answer only provide the first three numbers and do not include any symbols, for example, $"543$

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