Clear Here Scenario

Essay by golfman96University, Master'sA, May 2010

download word file, 4 pages 0.0

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Clear Here Cost Scenario

Cost Scenario

In a manufacturing company, the firm conducts analysis if to accept and generate requested order based on the ability of the facility, and consider all costs such fixed costs, variable costs, and opportunity costs. In this scenario, Clear Hear producers of cell phones, must make a decision to agree to the order from the major chain Big Box. To move forward, the organization must determine how fixed and variable cost should be adjusted to maximize profits. The company needs to analyze, evaluate, and identify alternatives. They need to complete a risk analysis to identify probable threat and negative consequences of these alternative solutions. Finally Clear Hear needs to recommend the best alternative solution and articulate how it best meets their goals.

Initially, we need to figure what are the company's objectives and how can management's decision support its goal.

Clear Here company values the following (University of Phoenix, 2008):

Keep employees working

Provide customers with products on time and that reliably meet or exceed their expectations

Treat business partners the same as [Clear Hear] want to be treated

It is apparent that the organization's values can meet customers' expectation with the highest ethics and professionalism while maximizing the firm's resources to earn healthy profits. At the request of Big Box, management must use the cost concepts of opportunity costs and contribution analysis will both help identify and analyze alternative solutions to meet their goals. "Opportunity Cost is the cost of passing up the next best choice when making a decision" (Investor Words, 2010). Fixed resources are involved with opportunity costs. The fixed resources are material, labor, time, and capacity to produce from equipment and labor. The scenario had provided unit profitability report (University of...