Dominion Motors

Reduce outlay of 10HP drive to that of 7.5HP: 1.Cost of 10HP get is $908, nevertheless value drops from $1,580 to $1,200, so profit is reduced from $672 per motor to $292 per motor. effectively this is a molding reduction of 42.5% at wide-eyed price to 24.3% gross profit margin at the discounted price. 2.Customer purchases motor for $1,200. Then over 5 geezerhood or 60 mos work be are: 60*$200 = $12,000. Total woo is $13,200. Reengineer the 7.5hp for discover start contortion: 1.Costs would include reengineering research and cultivation, prescribed high component be since more(prenominal) advanced move would be needed for more torque. The manufacturing cost would now be $790 for the hot version and $867 for the big frame same temperature version. These redesigns make for to manufacturing costs and would be dilutive to the original margins and earnings. Margins would decline from $536 per motor to $410 or $333 with the respective redesign op tions. 2.Assuming retail price is gloss over the same, customer would represent $1,200 irrefutable usage costs of 60*$161.25 = $9,675 amounting to a do of $10,875 fagged over each motors life term designing a higher(prenominal) torque 5HP motor: 1.Research and development of this motor would be time consuming (5mos) and costly ($75,000 enthronement in engineering and canvassing).

DMC shortly has a high margin 5HP motor, costs are except 50% of resale price. This new circumstantial purpose design with higher torque will in like manner cost much more to manufacture, approx $665 per motor. It wil l be priced at $1045, expiration a smaller ! margin than any other motor DMC manufactures. 2.Assuming same retail price, customer would pay $1,045 plus usage costs of 60*$125 = $7,500 so grand total of $8,545 over 5 years. Persuade link up that test results are weighted too heavily on starting torque: 1.This option does not impact current motor costs. There may be a cost associated with doing superfluous research needed to persuade the tester, John Bridges. The fictional slip specifically notes that DMC would have to...If you want to get a full(a) essay, order it on our website: OrderCustomPaper.com

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