Instructions: Based on the information above why should I use the Pursue chase d
ID: 2544526 • Letter: I
Question
Instructions: Based on the information above why should I use the Pursue chase demand as an adjusting capacity strategy?
Real Projected Variation Year 5 Year 6 Sales forecast (in units) 9,441 9,931 Sales forecast (in units) Inventory - Beginning of year 289 289 Production target 9,642 9,642 Kayaks available for sale 9,931 9,931 Less: Sales forecast 9,441 9,931 Less: Return of goods 201 211 Inventory - End of year 289 0 Revenue Sales of kayaks at regular price 6 585 445 6 926 289 + 5.2% Less: Retail Discount 1 810 997 1 904 729 Net sales 4 774 448 5 021 559 + 5.2% Cost of goods sold Finished products stock - Beginning of year 78 897 77 169 Add: Cost of finished products 2 574 599 2 573 698 Goods available for sale 2 653 496 2 650 867 Less: Finished products stock - End of year 77 169 0 Cost of goods manufactured 2 576 327 2 650 867 Add: Freight 395 155 399 846 Cost of goods sold 2 971 482 3 050 713 + 2.7% Gross Profit (loss) 1 802 966 1 970 847 + 9.3% Operating Expenses Sales Expenses Salaries and Benefits 181 371 181 371 0.0% Commission 143 233 150 647 + 5.2% Travel and Hospitality 20 225 20 511 + 1.4% Advertising and Promotion 55 000 55 000 0.0% Selling expenses 399 830 407 529 + 1.9% Administration / General Expenses Salaries and Benefits 506 483 526 922 + 4.0% Profit-sharing for upper management 0 0 - Layoffs 0 0 - Donations 4 157 4 157 0.0% Taxes and Licences 26 190 26 561 + 1.4% Training Expenses 33 897 34 301 + 1.2% Insurances - Administration 4 144 4 203 + 1.4% Other Expenses 45 553 46 198 + 1.4% Total Administration / General Expenses 620 426 642 342 + 3.5% Financial Expenses Banking Charges 5 061 5 398 Interest expense - Short term 5 252 6 114 Penalty for exceeding banking line of credit 0 0 Interest expense - Long term 17 200 13 477 Total Financial Expenses 27 513 24 990 - 9.2% Total Operating Expenses 1 047 768 1 074 861 + 2.6% Operating Income (loss) 755 198 895 986 + 18.6% Other Revenue (expenses) Investments Income 3 264 0 Earnings (loss) on disposable assets 0 0 Contingencies ( 18 130) 0 Total Other Revenue (expenses) ( 14 866) 0 - Income (loss) before taxes 740 333 895 986 Income taxes ( 236 906) ( 286 715) Tax credit for past losses 0 0 Intervention by the instructor 0 0 Net Profit (loss) 503 426 609 270 + 21.0% Net Profit Margin 10.5 % 12.1 %Explanation / Answer
Chase demand is production strategy whereby the output is increased or decreased in step with rising or falling demand.