A manufacturing company has the following financial information (in millions of $): Sales ......................................... $823 Cost of

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A manufacturing company has the following financial information (in millions of $):
Sales ......................................... $823
Cost of goods sold
Direct labor ................................... 85
Purchased materials ........................ 310
Overhead ..................................... 94
All other costs .............................. 250
Pretax earnings ............................. 84
a. What is the profit leverage effect of purchasing in this company?
b. What is the increase in earnings from an 8 percent savings in purchasing?
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Operations management in the supply chain decisions and cases

ISBN: 978-0077835439

7th edition

Authors: Roger G Schroeder, M. Johnny Rungtusanatham, Susan Meyer Goldstein

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