2.Case Solution
highly efficient supply chain management and manufacturing organization
Dell designs, develops, manufactures, markets, sells, and supports a wide range of products that are customized to customer requirements.
Dell’s manufacturing process consists of assembly, software installation, functional testing, and quality control.
Production labor cost
Materials used to make the products
Semiconductors
Cables
Insurances for the plant
Equipment costs
Many manufacturer companies show some increase in ‘gross margin % of net revenue’ as their gross margin increases
Gross margin = Net revenue – Variable Costs – Fixed Overhead Costs
From CVP analysis, if fixed costs are large and variable costs are relatively small, margin easily increases as net revenue increases when the company controls other variances well such as supply chains
Direct Cost : Cost of raw material component parts
Indirect Cost : Factory utility costs
Direct Cost : Component parts used to make these products
Indirect Cost : Factory insurance costs that are assigned to these products
Direct Cost : Salary of Senior Vice-President of Asia Pacific-Japan
Indirect Cost : Salary of Senior Vice President of Worldwide Procurement
Direct Cost : Sales representative who is dedicated to serving a certain segment
Indirect Cost : Research and development costs

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