Q2 (PART 1) - Dear Chegg I have divided this question into 2 parts, you can find next part in second question request.

The Heavy Metal Company (HMC) is involved in the processing of sheet metal into three products: A, B and C, using three processes; Pressing, Stretching and Rolling. Like many businesses HMC faces tough price competition in what is a mature world market. HMCs factory has 50 production lines, each of which contains all three processes. Raw material for the sheet metal is first pressed then stretched and finally rolled. The processing capacity varies for each process and the factory manager has provided the following data:

Processing time per metre in hours:

Product A Product B Product C Pressing 050 050 040 Stretching 025 040 025 Rolling 040 025 025

The factory operates for 18 hours each day for five days per week. It is closed for holidays for just two weeks of the year (10 working days), during which period annual maintenance is carried out.

On average one hour of labour is needed for each of the 225,000 hours of factory time (50 weeks x 5 days x 18 hours x 50 production lines). Labour is paid at a rate of $10 per hour.

The raw material cost per metre is $300 for product A, $250 for product B and $180 for product C. Other factory costs (excluding labour and raw materials) are $18,000,000 per year. Selling prices per metre are $70 for product A, $60 for product B and $27 for product C.

HMC works on a Just-In-Time basis and therefore carries very little inventory.

Required

1) Assuming that the TPAR of product C is less than 1:

2) Explain how HMC could improve the TPAR of product C.

3) Should product C be discontinued? Briefly discuss this suggestion, then briefly outline three other factors that HMC should consider before such a decision is taken.

Support your answer with workings.