Assigment Chapter 17

Problem 17.2

QUESTION:

Many consumers item today are designed in the United State and manufactured over-seas where labor cost is much lower. A middle range athletic shoe from a name brand manufacturer sells for $70 in the U.S. The shoe company buys the shoe from an off-shore supplier for $20 and sells to the retailer for $36. The profit margin for each unit in the chain is: supplier-9%, shoe company-17%, retailer-13%. Estimate major categories of cost breakdown for each unit of chain. Do this as a team problem and compare the results for the entire class.

No	Major Catogories	Detail Items	Cost (USD)
1.	Athletic Shoe Company	Materials	7.00
		Supplier’s operating profit	2.00
		Production Labor	3.00
		Rent, equipment	2.50
		Duties	4.00
		Shipping	1.00
		Total Cost	19.50
2.	Retailer	Sales, Distribution, admin	5.00
		Promotion and adverstising	4.00
		Company’s operating profit	7.00
		Research and development	30.00
		Total Cost	46.00
3.	Consumer	Personnel	16.00
		Retailer’s rent	19.00
		Retailer’s operating profit	20.00
		Others	16.00
		Total Cost	66.00