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Stickley is a leading manufacturer of household furniture that has been in business since 1900. More than 90% of Stickley's products are made by craftsmen in upstate New York and North Carolina workshops. Stickley products feature "overbuilt construction methods including Mortise and Tenon Joinery, Splining, Dovetailed Cross Rails, tongue and groove glue joints, pinned chair joints, ship lap planking, bracket foot construction, quadrilinear posts, and quarter rounds, to name a few. The company's focus on durability, quality, efficiency, and long-term results permeates the management and manufacturing process. Stickley is seeking to gain a competitive advantage by understanding its relative cost position compared to a competitor, Sherrill Furniture. Since 1944 Sherrill and its divisions have supplied custom home furniture to major furniture stores throughout the United States and Canada, All factories are located in the Hickory, North Carolina area. Sherrill has a workforce of skilled technicians who combine traditional manufacturing techniques and high quality materials to hand-build each piece of furniture. Custom furniture options are available in fabrics along with multiple woods and finishes. Below is a simplified chart showing the cost inputs to manufacture one Stickley 7000 Series arm chair, pictured below. Cost Category Direct Materials Direct Labor Shipping Selling and Administrative Expenses TOTAL Amount $450 $250 $150 $125 $975 To conduct a relative cost analysis, one would start by identifying what drives Sherrill's cost items, and how they might differ from Stickley's cost structure. Sherrill might differ, for instance, in how much it pays for inputs, or how well it uses those inputs; that is, it may differ in factor costs and/or productivity. What are common drivers of factor costs or productivity that you would want to consider for each line item on the 7000 Series arm chair cost summary, and that would help guide your information gathering efforts on Sherrill's costs? Be specific in describing the effect each cost driver would have on how you calculated Sherrill's cost structure. Stickley is a leading manufacturer of household furniture that has been in business since 1900. More than 90% of Stickley's products are made by craftsmen in upstate New York and North Carolina workshops. Stickley products feature "overbuilt construction methods including Mortise and Tenon Joinery, Splining, Dovetailed Cross Rails, tongue and groove glue joints, pinned chair joints, ship lap planking, bracket foot construction, quadrilinear posts, and quarter rounds, to name a few. The company's focus on durability, quality, efficiency, and long-term results permeates the management and manufacturing process. Stickley is seeking to gain a competitive advantage by understanding its relative cost position compared to a competitor, Sherrill Furniture. Since 1944 Sherrill and its divisions have supplied custom home furniture to major furniture stores throughout the United States and Canada, All factories are located in the Hickory, North Carolina area. Sherrill has a workforce of skilled technicians who combine traditional manufacturing techniques and high quality materials to hand-build each piece of furniture. Custom furniture options are available in fabrics along with multiple woods and finishes. Below is a simplified chart showing the cost inputs to manufacture one Stickley 7000 Series arm chair, pictured below. Cost Category Direct Materials Direct Labor Shipping Selling and Administrative Expenses TOTAL Amount $450 $250 $150 $125 $975 To conduct a relative cost analysis, one would start by identifying what drives Sherrill's cost items, and how they might differ from Stickley's cost structure. Sherrill might differ, for instance, in how much it pays for inputs, or how well it uses those inputs; that is, it may differ in factor costs and/or productivity. What are common drivers of factor costs or productivity that you would want to consider for each line item on the 7000 Series arm chair cost summary, and that would help guide your information gathering efforts on Sherrill's costs? Be specific in describing the effect each cost driver would have on how you calculated Sherrill's cost structure.
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