Q.2 Albert Pernelli a well-known consultant was hared to turn around" Inlet Steel Plate. In the year prior to his arral the company produced and sold 60.000 tons of steel plate for $800 per ton. The company has $20,000,000 of fixed manufacturing costs and 5400 per ton of variable manufacturing costs Selling and administrative costs are essentially fixed and amount to $9.000.000 Ar the end of the yeu the company had a loss of $5,000,000, as follows: Sales (60.000 tons x S500) Los cost of roods sold ($20,000,000 fixed-(500x66,000 tons) Gross Margan Les sellers and administrative costs Net Loss $45. 000 000 44.000.000 4.000.000 9.000.000 ($5,000,000) Upon aming x Inlet Steel Plate. Albert noted thar the company was operating substantially below capacity due to a weak market for steel plate He decided that the company had to take advantage of its capacity and ordered the company to increase production of steel plate to 90.000 ton. He also cut advertising and land off white collar workers, saving the company $2,000,000 Although sales remained at 60,000 tons, profit went from a loss of $5 million to a gain of $3.666,667. Albert recerved a large fee and aded to his reputation as a "turnaround genius' Required Assuming no changes in price or the company's cout structure, show the calculation of income under Albert's leadership? b. How much foxed cost is buried in endung unventory? Ded Albat seally create value for the company?
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a 200000
b 800000
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what's the first question couldn't understand you
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