Siemens Electric Motor Works (A) Assignment Questions|all that you need

Siemens Electric Motor Works (A) Assignment Questions: 1. Calculate the cost of the five orders in Exhibit-4 under the traditional and new systems. Hint: first calculate the cost of processing an order and handling a special component. The cost of the five orders in Exhibit-4 under the traditional and new systems is shown below. This shows that the cost of each motor increases as the number of special components increases. To properly calculate of the five orders under the new system, we must first calculate the cost of order processing and special components is calculated using cost of each divided by the cost driver. Special components cost is driven by the number of times processed and the cost of order processing is driven by the number of orders. This calculation shows that the cost per special order processed is $60.00 and the cost of each order processed is $210.29. Cost of processing and handling Order A B C D E Base Motor Cost $247.00 $247.00 $247.00 $247.00 $247.00 Special Compoenent Cost $32.20 $64.40 $96.60 $161.00 $322.00 Total Materials & MFG Costs $279.20 $311.40 $343.60 $408.00 $569.00 Support Related Overhead $97.72 $108.99 $120.26 $142.80 $199.15 1 $376.92 $420.39 $463.86 $550.80 $768.15 10 $3,769.20 $4,203.90 $4,638.60 $5,508.00 $7,681.50 20 $7,538.40 $8,407.80 $9,277.20 $11,016.00 $15,363.00 100 $37,692.00 $42,039.00 $46,386.00 $55,080.00 $76,815.00 Old System Number of Special Components Cost Cost (000) Amount Rate Special Components $19,500.00 325,000 $60.00 Order Processing $13,800.00 65,625 $210.29 Order A B C D E Base Motor Cost $304.00 $304.00 $304.00 $304.00 $304.00 Special Motor Costs $39.60 $79.20 $118.80 $198.00 $396.00 Special Component Handling $60.00 $120.00 $180.00 $300.00 $600.00 Order Processing Costs $210.29 $210.29 $210.29 $210.29 $210.29 Cost 1 $613.89 $713.49 $813.09 $1,012.29 $1,510.29 10 $3,706.29 $4,162.29 $4,618.29 $5,530.29 $7,810.29 20 $7,142.29 $7,994.29 $8,846.29 $10,550.29 $14,810.29 100 $34,630.29 $38,650.29 $42,670.29 $50,710.29 $70,810.29 New System This study source was downloaded by from CourseH on :32:15 GMT -06:00 2. Calculate traditional and new system costs for each order if 1 unit, 10 units, 20 units, or 100 units are ordered. Graph the product costs against volume ordered. Cost per unit under the old system is flat regardless of number of units ordered. However, under the new system, the cost per unit is about the same as they are for the old system for orders greater than 10. But 74% of the orders have less than 5 units resulting in very disproportionate numbers. Thus, the new system more accurately represents to true cost of fulfilling each order. Siemens should discourage small orders and incent customers to order in quantities greater than 10 to reduce per unit costs through premium pricing s