MATH 223 Lecture Notes - Lecture 2: Fixed Cost, Unit, Variable Cost

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COMM 101 107
36965144Assignment2 – Case Analysis of Bayjo Ltd
2014-10-19
STUDENT NUMBER: 36965144
Anran Li
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Three Key Recommendations
1- Reduce the Production of Skateboard Department
After analyzing the current situation for Bayjo Ltd, it is clear that the department of manufacturing and
selling skateboards made the fewest profits of the three parts of the company. It is hard to make the
choice because the company starts with the business of manufacturing skateboards, and the owner of
the company is an acid teenage, award winning skateboarder, who provides four new designs of
skateboards each year. However, the sales condition is not quite well, and to reach the goal of making
more profits, it is better to reduce the cost of Skateboard Department to keep and promote the other two
departments; that should be the best choice to make the business more profitable than now.
2- Fire the Manager of Bicycles Department
According to The Conversations” part of the case analysis booklet, it is clear to find that the Bike
manager seems not have enough experience to fit for this job, although he is keen to expand. He wants
to have more money and time for his department without thinking about others’ departments conditions.
Even the bike manager expressed his opinions out to the public that the Scooter manager has known
what he thought and replied strongly back to him. It would be a thorny problem if managers who work
in the same company cannot communicate well with each other, which might affect the real running of
the business, so it is time to fire the Bike manager.
3- Do Not Supply Giantco’s Order
Relating to the “The Email part of the case analysis booklet, it says that Bayjo Ltd will work with
Giantco, which is a large well respected furniture, food and toy retailer. Giantco wants to get a supply
of 1,800 bikes per year for 3 years at a price of $195, then the company will retail it for $220. However,
this company never sells bicycles before. Although the bikes for this order would require 50% of the
variable cost of the variable cost of the regular bikes, and no maintenance or inspection costs required
for these bikes, I still think this will damage Bayjo Ltd.’s reputation, and I recommend the company
stop doing this trade.
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