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Read carefully each of the given problems. Solve each requirement manually or using an excel. If you use excel, provide a short description of your steps. If you solve manually, avoid using different pens and penmanship. Use the answer sheet provided. Scan and upload your answers in PDF format.
Questions:
Question 1:
Falcon Company manufactures the camera system of a DRONE assembly. Its manufacturing assembly plant is located at the middle east, and started its operation in the year 2010. The company exported eighty percent of its production to the American and European drone companies. It has at least three competitors producing the same line of product for drone assembly in China, South Korea and India. The CEO or Chief Operating Officer of Falcon company is looking forward on its company strategies to cope up with the stiff competition in the market. Selling price, raw material costs, labor costs, and distribution costs are just some of the items that the CEO are keen of considering for possible financial analysis. He directed his operation manager, purchasing manager, and finance manager for an urgent meeting to discuss this matter. The meeting will be focusing on the strategies to further reduce company’s cost of production, and other product related and overhead costs. The company estimated monthly costs and monthly sale revenues for this operation are given in Table Q1. All costs are monthly basis except the company taxes.
(i) The breakeven point for this situation;
(ii) Contribution margin;
(iii) Using a production range from zero to 10,000 units a month, develop the following cost-volume-profit graphical presentations
and explain their significance;
(a) A breakeven chart;
(b) A profit-volume graph.
(iv) Discuss possible strategies of the company to decrease breakeven point, contribution margin, and increase profitability without having risk of losing the market share.
Note: I’ve uploaded the Table Q1 in file named “Table for Question 1”.
Question 2:
JAMIL Car shop offers the following services as shown in Table Q2. The car shop has only two technicians that will do the specific job together. Table Q2 shows the duration for each of the services offered. The frequency of occurrence for each of the services for the past month is also shown in Table Q2. It is estimated that one (1) customer arrives in the car shop every 45-minute period. Using Monte Carlo Simulation technique, determine the following;
(i) Develop a Probability Distribution model;
(ii) Determine the average waiting time of a customer considering a time duration from 8:00AM to 5:00 PM. Use excel to generate random numbers.
Note: I’ve uploaded the Table Q1 in file named “Table for Question 2”.
Question 3:
The Muscat Electric Company ventures to a new project in the eastern part of the capital city which is a 200-kilometer, 300 kV transmission lines. The company has to choose between an Overhead Cable Transmission System and Underground Cable Transmission System. Table Q3 shows the initial investment for each type, the expected revenues during its lifetime which includes the cost savings incurred by underground transmission system over the overhead transmission system. The company has estimated a salvage value for each type of transmission to be 5% of the initial investment. As a company cost of capital is 8% per year. Using the following techniques for capital investment appraisal, perform the following;
(i) Simple Payback Period;
(ii) Benefit-Cost Ratio
(iii) Internal rate of return IRR.
(iv) Determine which of the alternative is acceptable to the company based on the above results
Note: I’ve uploaded the Table Q1 in file named “Table for Question 3”.
Question 4:
A Chemical Company LLC is unable to satisfy customer demand for one of their products. The ratios for mixing the outputs from processes C, D and E are 2, 1 and 1 respectively. The ratio for the departments F and G is 3 and 1, and the ratio for departments H and I is 4 and 1. Using Table Q4, Determine the following;
(i) The system capacity and bottleneck;
(ii) How much system capacity can be gained by adding capacity to the bottleneck
Note: I’ve uploaded the Table Q1 in file named “Table for Question 4”.
*** Files has been uploaded for each question.

Table Q4

Department

Capacity (liters/hour)

Predecessors

A

450

B

450

A

C

350

B

D

250

E

250

F

750

C, D and E

G

300

H

950

F, and G

I

350

J

1100

H and I

K

1400

J

Table Q3: Revenue & Expenses in Million OMR

Underground

Items

Cable Transmission

Cable Transmission

System

System

Initial Investment

9,627

13,630

(million OMR)

Annual Revenue + cost

810

1033

savings

(million OMR)

Increases by 2% per year

Increases by 2% per year

First 10 years:

First 10 years:

Annual Operating &

209

173

Maintenance O&M Cost

Succeeding years:

Succeeding years:

(million OMR)

3% increase per year

1.5% increase per year

Annual taxes

10% of (Annual Revenue

10% of (Annual Revenue

(million OMR)

+ cost savings)

+ cost savings)

Life expectancy, years

50

40

Table Q1

Items

Unit

Amount

Total Revenue

OMR

1,853,800

Total Sales quantity

units or pieces

8,060

Direct Labor Cost

OMR

64,540

Direct Material Cost

OMR

1,363,900

Other Variable expense

OMR

1,810

Management Salaries

OMR

15,460

Utilities (electricity, water,

OMR

communications)

13,830

OMR

Fixed , 20% Variable)

135,190

Interest Expense

OMR

2,260

Distribution Expense(80%

OMR

Fixed, 20% Variable)

45,920

Selling and Commission

OMR

(90% Fixed and 10%

Variable)

10,130

* Taxes (annual)

OMR

3,336,840

Note:
* Total tax annually

Table Q2: Car Shop Services Offered

Time Required to

Frequency of services

Services

Complete the Service

for past month

(minutes)

Oil & Coolant Level

15

13

Check-up

Air Filter Change

30

23

Tire Pressure Check &

10

54

Charging

Oil & Filter Change

55

62

Rotate Tire & Alignment

90

10

Waxing Vehicle

45

53

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