Provide a response to the following questions.

Analyze the bill of materials (BOM) costs in Exhibit 16 (below). For the cost categories wherein the costs are very different at the Moraine (Ohio) and Tianjin factories, explain why?

Would you supply the new order from Moraine or Tianjin? Identify the pros and cons of supplying from either location and explain briefly the rationale for your final choice.

 

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Comparison of Total Costs per Windshield: Tianjin versus Moraine Cost Item (USS unless otherwise specified) Raw materials Labor Electricity Depreciation Other manufacturing costs² SG&A Packaging, transportation, and inventory carrying costs Total Other Cost Factors Yield -First-pass yield - Rework and repair Output per shift Salary per month Working hours per month Number of workers per line Electricity, cost per kilowatt-hr. Tianjin $13.01 2.28 1.55 1.55 0.88 6.00 15.33 40.60 Tianjin 93% 91% 2% 780 pairs CNY5,000/month 8 hr./day, 25 days 57 CNY 0.69 Moraine $19.90 23.93 1.58 3.17 1.73 8.00 2.13 60.44 Moraine 81% 81% No repair - Lack of skills -Low productivity 650 pairs $25/hr. 8 hr./day, 22 days 63 $0.0600 Target Cost $50.00 Comparison of Total Costs per Windshield: Tianjin versus Moraine Cost Item (USS unless otherwise specified) Raw materials Labor Electricity Depreciation Other manufacturing costs² SG&A Packaging, transportation, and inventory carrying costs Total Other Cost Factors Yield -First-pass yield - Rework and repair Output per shift Salary per month Working hours per month Number of workers per line Electricity, cost per kilowatt-hr. Tianjin $13.01 2.28 1.55 1.55 0.88 6.00 15.33 40.60 Tianjin 93% 91% 2% 780 pairs CNY5,000/month 8 hr./day, 25 days 57 CNY 0.69 Moraine $19.90 23.93 1.58 3.17 1.73 8.00 2.13 60.44 Moraine 81% 81% No repair - Lack of skills -Low productivity 650 pairs $25/hr. 8 hr./day, 22 days 63 $0.0600 Target Cost $50.00

Answer rating: 100% (QA)

The differences in BOM costs between the Moraine and Tianjin factories can be attributed to several factors 1 Raw materials The cost of raw materials ... View the full answer