For question 1, calculate the (a) margin currently earned from manufacturing and selling the product and (b) expected margin from outsourcing the product, reducing the selling price, and increasing the volume sold. (c) Does the margin increase or decrease, and by how much? (d) Are the upfront costs of $1.2 million recovered reasonably quickly?

Patterson Manufacturing Slane Marianity University of Oklahoma and wide New Zealand Andre Slessor leite New Zealand INTRODUCTION The vice president s Cubeldinu ghen you a new Recently asked the folks at Paterson Man ning to develop as for improving their They have with a ll I want you to evaluate the walls v ells it wastainable? Visit the operation and back a n d As you vel to the site you view a brief hisory of the firm Pan Manufacturing was founded in a small maternity were the Wesley Patten started the female f r am that peovided mechanical power to drive siden, lathes, and polishers. These were used to produce precision other memu r needed. The quickly established a reputation for pre que prot a g The speed Wesley did the w heed to develope peces that needs He of met with peodors for them. Hemedi w ames- He also new manufacturing and close en products were of the highest The fimm grew seadily and by 1925, was and still is the Community's larm eyer. Wesley donated the land that in the city central pa le paid for sinecting che fint municipal M e the company was the prima donore co m pel bard the local dhe by the time and its employees w ent way of Community in the Comples and Paten Cami The Great Depression in the 1980s brought hard times to the company yet none of its employees were discharged Instead, the firm and its employees and to spread the available workme p loyees by reducing cach individuals working on and wa). During that time, the fimm also suspended paying dividends to its owners After the company resumed to prosperity in the 1940s.it continued to emphasise tomen diren creative solutions and its loyal workforce on l y peoduct design challen Wesley denhofes to his son who need t o Wesley grandson and then to Wesley Butove was sold to your employee Columbia Holdings BACKGROUND Columbia invefamily and with presence in niche markets C umbia retains existing management and local business proces provides centralized services, such as finans i nance, Heily on the can The fimilioremechowice pand cu fem o need to spend the The collected: The Exhibit needs to be adjusted for the expected 155 increase in wome. The cost formats and later will increase preporuchew and where unlikely to the wested. The suppliermark will be 10 of the new total cost In addition to the productos Puters will incur transportati costs to get the product from the manufacturer www chow The transportation costs variable and would have been $0.6 milline for the wolume of product in Year THE TASK corpore l Puther has remained posable in the site, but is nietment has been declining You the Purce complex isameting with the Hewides some b ack is a dars han medeww el oita hemati Cutam illins py for product that we spelesia's Compo u lou former production CEO Palhas de wandeniniai and und die Hew ly reduced man , which led to pro in the two year following the sale of the company Those curly results have t he petitions for our continuing para Carpal will help to meeting che potti.he wid "Our proposal is to stop manufacturing our largest selling product the Cape 110, and instead acquise it from an ventas pliexcontinued the roller. This peoduct mely p o or total sales revenue and production valums. But sales have been declining because competitors are offering a similar product at lower prices. We chink that by reducine our price by 5% we can increase our unit sales volume by 15%. The increased volume coupled with a lower productos from the office supplier should early double our firm wide proti The controale provided some going manis, Exhibitum per for the five yenin Pan Manufacturing wat Columbia Hold Year represents the first full year after Jessica and Year the year the past. Exhibits 2.5 and provide an income sement for Years, the curre employee angelyje, detailed price pepesa num the supplier The comerc d The analysis is pretty htforward Sales of the Gadgeon were $27 millions The direct materials came to $14.3 million while w o 42mm welcated the Run 529 million of the head will be www man the doon E . The mig och sedan subject . draatchi worden. In After his brief overview the controllerhande yo the exhibit and y ou with the men younelte ensure that my project for the increase in profit is correct As you make your way to an empty office to review the numben, the marketing manar a ches you. She pleads "Don't let them do this. The proposed action will deals devastating financial blow to our community Wesley Patterson would have never approved such a move. He loved this town. REQUIRED 1. Using the controller projections, prepare an analysis of the expected effect of using the product on Paterson's potiability 2. Would it be a viable amative in the locally and lower there where the increase in wolume? 3. Does them have an obligation to maintain employment levels in the Whate d with the les whether the peopesal show the wood Provide G enes Exit Pettersen Maaturing Five-Year Summary of Operations 1549 Sias SLI 27% 235 Exhibit 2: Summary Income Statement for Patterson Manufacturing Distribution of Current Patterson Employees by Job Title din Pas 412 0 30 EM On Share Supplier's Price Proposal for the Volume af Product in Yews Mos ABOUT NA With a w ide af mere than 65.000 lei IMAC of Management is the world leading decadem i ng and profes sori per IMA doua mamimi peletowe this career the CM Certified merement Acondiciones, peeled networking and decay of the chesth und penal de F IMA place Patterson Manufacturing Slane Marianity University of Oklahoma and wide New Zealand Andre Slessor leite New Zealand INTRODUCTION The vice president s Cubeldinu ghen you a new Recently asked the folks at Paterson Man ning to develop as for improving their They have with a ll I want you to evaluate the walls v ells it wastainable? Visit the operation and back a n d As you vel to the site you view a brief hisory of the firm Pan Manufacturing was founded in a small maternity were the Wesley Patten started the female f r am that peovided mechanical power to drive siden, lathes, and polishers. These were used to produce precision other memu r needed. The quickly established a reputation for pre que prot a g The speed Wesley did the w heed to develope peces that needs He of met with peodors for them. Hemedi w ames- He also new manufacturing and close en products were of the highest The fimm grew seadily and by 1925, was and still is the Community's larm eyer. Wesley donated the land that in the city central pa le paid for sinecting che fint municipal M e the company was the prima donore co m pel bard the local dhe by the time and its employees w ent way of Community in the Comples and Paten Cami The Great Depression in the 1980s brought hard times to the company yet none of its employees were discharged Instead, the firm and its employees and to spread the available workme p loyees by reducing cach individuals working on and wa). During that time, the fimm also suspended paying dividends to its owners After the company resumed to prosperity in the 1940s.it continued to emphasise tomen diren creative solutions and its loyal workforce on l y peoduct design challen Wesley denhofes to his son who need t o Wesley grandson and then to Wesley Butove was sold to your employee Columbia Holdings BACKGROUND Columbia invefamily and with presence in niche markets C umbia retains existing management and local business proces provides centralized services, such as finans i nance, Heily on the can The fimilioremechowice pand cu fem o need to spend the The collected: The Exhibit needs to be adjusted for the expected 155 increase in wome. The cost formats and later will increase preporuchew and where unlikely to the wested. The suppliermark will be 10 of the new total cost In addition to the productos Puters will incur transportati costs to get the product from the manufacturer www chow The transportation costs variable and would have been $0.6 milline for the wolume of product in Year THE TASK corpore l Puther has remained posable in the site, but is nietment has been declining You the Purce complex isameting with the Hewides some b ack is a dars han medeww el oita hemati Cutam illins py for product that we spelesia's Compo u lou former production CEO Palhas de wandeniniai and und die Hew ly reduced man , which led to pro in the two year following the sale of the company Those curly results have t he petitions for our continuing para Carpal will help to meeting che potti.he wid "Our proposal is to stop manufacturing our largest selling product the Cape 110, and instead acquise it from an ventas pliexcontinued the roller. This peoduct mely p o or total sales revenue and production valums. But sales have been declining because competitors are offering a similar product at lower prices. We chink that by reducine our price by 5% we can increase our unit sales volume by 15%. The increased volume coupled with a lower productos from the office supplier should early double our firm wide proti The controale provided some going manis, Exhibitum per for the five yenin Pan Manufacturing wat Columbia Hold Year represents the first full year after Jessica and Year the year the past. Exhibits 2.5 and provide an income sement for Years, the curre employee angelyje, detailed price pepesa num the supplier The comerc d The analysis is pretty htforward Sales of the Gadgeon were $27 millions The direct materials came to $14.3 million while w o 42mm welcated the Run 529 million of the head will be www man the doon E . The mig och sedan subject . draatchi worden. In After his brief overview the controllerhande yo the exhibit and y ou with the men younelte ensure that my project for the increase in profit is correct As you make your way to an empty office to review the numben, the marketing manar a ches you. She pleads "Don't let them do this. The proposed action will deals devastating financial blow to our community Wesley Patterson would have never approved such a move. He loved this town. REQUIRED 1. Using the controller projections, prepare an analysis of the expected effect of using the product on Paterson's potiability 2. Would it be a viable amative in the locally and lower there where the increase in wolume? 3. Does them have an obligation to maintain employment levels in the Whate d with the les whether the peopesal show the wood Provide G enes Exit Pettersen Maaturing Five-Year Summary of Operations 1549 Sias SLI 27% 235 Exhibit 2: Summary Income Statement for Patterson Manufacturing Distribution of Current Patterson Employees by Job Title din Pas 412 0 30 EM On Share Supplier's Price Proposal for the Volume af Product in Yews Mos ABOUT NA With a w ide af mere than 65.000 lei IMAC of Management is the world leading decadem i ng and profes sori per IMA doua mamimi peletowe this career the CM Certified merement Acondiciones, peeled networking and decay of the chesth und penal de F IMA place