crosoft Word - Case Study 21 - A A A 11 - Calitri (www -A x x, abeU I B b 1 Case Study For a long year, Car Painting Company has provided their services for automobiles in its region Manufacturers of various metal products have relied on the quality and quick turnaround time provided by Car painting company and its 20 skilled employees. During the last year, as a result of a sharp uptum in the economy, the company's services have increased by 30% relative to the previous year. The company has not been able to increase its capacity fast enough, so it has had to turn work away because it cannot keep up with customer requests. Top management is discussing two alternatives to cover customer needs which will increase sales 5400,000 First continuing with manual based depending on labor work. regarding to this alternative the company should increase their labsor to 30 skilled labor which could increme variable cost by 29% and fixed cost is remained constant. Second: moving to automate based depending on sophisticated robotic painting booth. The booth would representa considerable move in the direction of automation versus manual labor. As a result of purchasing the booth, it would most likely lay off 10 of its skilled painters and variable cost will be declined by S200,000, on the other hand fixed cost will be increased to $800,000 Current Situation before taking the decision is: Service Revenuss $1,600,000 Variable Cast 51.200.000 Contribution Margin $400,000 Fixed cost $3.30 000 Operating income 520,000 Instructions 1- if you are a financial advisor to management and based on above data which alternative would you commend them to keep up customer outstanding that even to $2.000.000 depending of on skill workers proach a moving to automated approach you decision will based on financial indicators that you are in chapter-CV 2. Which alternative achieve target Pro S150.000 3- At what point of the operating income will be deal in bath alternative al service forventes estimated to be decused in next year by 10% which are more ( 15/329: W crosoft Word - Case Study 21 - A A A 11 - Calitri (www -A x x, abeU I B b 1 Case Study For a long year, Car Painting Company has provided their services for automobiles in its region Manufacturers of various metal products have relied on the quality and quick turnaround time provided by Car painting company and its 20 skilled employees. During the last year, as a result of a sharp uptum in the economy, the company's services have increased by 30% relative to the previous year. The company has not been able to increase its capacity fast enough, so it has had to turn work away because it cannot keep up with customer requests. Top management is discussing two alternatives to cover customer needs which will increase sales 5400,000 First continuing with manual based depending on labor work. regarding to this alternative the company should increase their labsor to 30 skilled labor which could increme variable cost by 29% and fixed cost is remained constant. Second: moving to automate based depending on sophisticated robotic painting booth. The booth would representa considerable move in the direction of automation versus manual labor. As a result of purchasing the booth, it would most likely lay off 10 of its skilled painters and variable cost will be declined by S200,000, on the other hand fixed cost will be increased to $800,000 Current Situation before taking the decision is: Service Revenuss $1,600,000 Variable Cast 51.200.000 Contribution Margin $400,000 Fixed cost $3.30 000 Operating income 520,000 Instructions 1- if you are a financial advisor to management and based on above data which alternative would you commend them to keep up customer outstanding that even to $2.000.000 depending of on skill workers proach a moving to automated approach you decision will based on financial indicators that you are in chapter-CV 2. Which alternative achieve target Pro S150.000 3- At what point of the operating income will be deal in bath alternative al service forventes estimated to be decused in next year by 10% which are more ( 15/329: W