'Swisher Mower and Machine Company (Smc)\r'

' tribute: Swisher lawn lawn mower and Machine Company should reject the aver to produce the orphic-Label stake. RATIONALE: •Standard Riding Mower contribution per unit would drop from $97 to $33. 98, which is $63. 02 per mower. ( vermiform appendix 4) • component part Margin would drop from 14. 92% to 5. 5%, which is 9. 42%. (Appendix 4) •Swisher Mower would exclusively profit $62,819 from producing the 8,200 units in the esoteric-Label in the first full year of increaseion. (Appendix 5) oProfit per mower is alone $7. 66 per unit. Cannibalization of SMC current mower is ($29,000) button from the private-label brand. Plus, the loss of supererogatory smaller independent dealer in the future since there will be an convergency in trade areas. (Appendix 3) •SMC will incur additional labor cost on 2,450 units because the factory is already at full capacity. oThis results in additional $63,700 overtime labor cost, which is $7. 77 per unit. (Appendix 1) •With the increase in labor, materials, overhead, and spot tax, the additional variable cost is $30. 52 per unit. Appendix 1) oThis brings the total variable cost to $583. 52. (Appendix 4) •SMC will only be making $7. 66 per mower, and the community wants them to be affirm $22 per hour for any maintenance on a mower under warranty. Therefore SMC would have to sell 3 additional mowers to cover severally hour work done to a mower under warranty. •The accounts receivable and inventory carrying cost for the private-label brand is $175,789. 97, $59,386. 73 and $116,412. 24 respectively. (Appendix 2) •The image of company would be altered since SMC would double their sales with one private-label product.\r\nSince the company has a reputation of being small and in the flesh(predicate) introducing the private-label could be detrimental to their current business. •Remain positioning quo and on average increase profit by 10% and continue to widen the breath e of the product lines, Trim-Max. APPENDICES APPENDIX 1 Incremental greet for Private Label Direct Labor be $650 x 4% = $26 redundant Labor for 2,450 units = 2,450 x $26 = $63,700 / 8,200 units = $7. 77 per Unit Direct Materials Cost $650 x 1% = $6. 50 Additional bash $650 x 1% = $6. 50 Additional airscrew Tax $650 x 1. % = $9. 75 Total Additional Var. Cost = $7. 77 + $6. 50 + $6. 50 + $9. 75 = $30. 52 APPENDIX 2 Carrying Cost for Private Label Accounts Receivable A/R upset Rate = 365 / 45 = 8. 1 8,200 units x $617. 50 = $5,063,500 / 8. 1 = 625,123. 46 x 9. 5% = $59,386. 73 Inventory Inv. Turnover Rate = 5. 8 ordinary Inv. = 2,100 units Unit Cost = $583. 52 2,100 units x $583. 52 = $1,225,392 x 9. 5% = $116,412. 24 Total Carrying Cost = A/R + Inv. = $175,798. 97 APPENDIX 3 Cannibalization SMC mower = $650 †$553 = $97 Contribution Per Unit Units illogical = 300 $97 x 300 = ($29,100)\r\n'