13. You the manager of a paper mill (M. Ltd.) and have recently come across a...

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13. You the manager of a paper mill (M. Ltd.) and have recently come across a particular type of paper, which is being sold at a substantially lower rate (by another company-ABC Ltd.) than the price being charged by your own mill. The value chain for one of MT of such paper for ABC Ltd is follows: "ABC Ltd..... - Merchant Printer Customer". ****** ABC Ltd sells this particular paper to the merchant at the rate of 30,400 per MT. ABC Ltd pays for the freight which amounts to 600 per MT. Average returns and allowances amount to 4% of sales and approximately equal to 1200 per MT. The value chain of your company, through which the paper reaches the ultimate customer is similar to that of ABC Ltd. However, your mill does not sell directly to the merchant. The latter receives the paper from a huge distribution center maintained by your company at Haryana. Shipment costs from the mill to the Distribution Center amount to 200 per MT while the operating costs in the Distribution Center have been estimated to be 125 per MT. The return on investments required by the Distribution Center for the investments made amount to an estimated 120 per MT. You are required to compute the "Mill Manufacturing Target Cost" for this particular paper for your company. You may assume that the return on the Investment expected by your company equals 120 per MT of such paper. 13. You the manager of a paper mill (M. Ltd.) and have recently come across a particular type of paper, which is being sold at a substantially lower rate (by another company-ABC Ltd.) than the price being charged by your own mill. The value chain for one of MT of such paper for ABC Ltd is follows: "ABC Ltd..... - Merchant Printer Customer". ****** ABC Ltd sells this particular paper to the merchant at the rate of 30,400 per MT. ABC Ltd pays for the freight which amounts to 600 per MT. Average returns and allowances amount to 4% of sales and approximately equal to 1200 per MT. The value chain of your company, through which the paper reaches the ultimate customer is similar to that of ABC Ltd. However, your mill does not sell directly to the merchant. The latter receives the paper from a huge distribution center maintained by your company at Haryana. Shipment costs from the mill to the Distribution Center amount to 200 per MT while the operating costs in the Distribution Center have been estimated to be 125 per MT. The return on investments required by the Distribution Center for the investments made amount to an estimated 120 per MT. You are required to compute the "Mill Manufacturing Target Cost" for this particular paper for your company. You may assume that the return on the Investment expected by your company equals 120 per MT of such paper.

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