11. There are two logistics network systems. Company JYZ is currently applying system 1 for the distribution and warehousing of its raw materials. In system 1, the raw materials are shipped from suppliers to the warehouse, where sorting is implemented. The materials are then shipped from the warehouse to the customers. JYZ is now thinking of implementing system 2, where raw materials are shipped from suppliers directly to the customers. The costs of both systems are provided below (per quarter). The cost formula is y = a + x(b₁ + b₂ + b3), where bbb3 are the unit cost for handling, logistics, and sorting. System 1 System 2 Fixed cost $2000 $1000 Variable cost Variable cost (handling per unit) (logistics per unit) $0.02 $0.01 $0.01 $0.05 Variable cost (Sorting per unit) $0.03 $0.01 y=a+b(x1+x2 + x3) a. What is the breakeven point for the two systems to have identical total cost? b. The total number of units of JYZ is 90,000. Given the total unit 90,000, do you think it will be worth it if company JYZ switches from system 1 to system 2?

11. There are two logistics network systems. Company JYZ is currently applying system 1 for the distribution and warehousing of its raw materials. In system 1, the raw materials are shipped from suppliers to the warehouse, where sorting is implemented. The materials are then shipped from the warehouse to the customers. JYZ is now thinking of implementing system 2, where raw materials are shipped from suppliers directly to the customers. The costs of both systems are provided below (per quarter). The cost formula is y = a + x(b₁ + b₂ + b3), where bbb3 are the unit cost for handling, logistics, and sorting. System 1 System 2 Fixed cost $2000 $1000 Variable cost Variable cost (handling per unit) (logistics per unit) $0.02 $0.01 $0.01 $0.05 Variable cost (Sorting per unit) $0.03 $0.01 y=a+b(x1+x2 + x3) a. What is the breakeven point for the two systems to have identical total cost? b. The total number of units of JYZ is 90,000. Given the total unit 90,000, do you think it will be worth it if company JYZ switches from system 1 to system 2?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 36P: Reducir, Inc., produces two different types of hydraulic cylinders. Reducir produces a major...

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