CUMBERLAND METAL INDUSTRIESOverviewCumberland Metal Industries (CMI) is looking to diversify its product line. A sales representative in the Houston area made us aware of the use of coiled metal during pile driving as a cushion to absorb shock. The curved metal pads have been trialled by two contracting groups, Colerick and Fazio, both with promising success and notable advantages over current asbestos pads. Colerick asked for a price so they could purchase and use our pads on other job sites. Colerick was informed that CMI would provide them with pricing information by the end of the week. Price is the first priority which will be analyzed based on cost savings to the company, manufacturing costs and break-even volume. Marketing options will also be analyzed based on market share, market size and sales force size. AnalysisAdvantages of Coiled Metal Pads Coiled metal pads drive 30 times more piles per pad than asbestos pads because they transfer more force and prevent impact while creating less heat than asbestos pads. conventional asbestos pads (part 1). This also helps prevent the piles from vibrating or cracking. Wrapped metal pads only heat up to 250ºF, which is 450º cooler than asbestos pads. The health dangers associated with asbestos have also made those who use asbestos pads wary of the risks. Value for Contractors Based on both experiences with CMI's coiled pads, contractors traveled an average of 30% more feet per hour with our coiled pads compared to typical asbestos pads. The pads also drove 2,800% more piles per set of pads than asbestos pads. Contractors used an average of 630 asbestos pads for the project; at a cost of $1,575. The total duration of the change of scenery was 700 minutes. With our coiled metal pads they used 11 pads with changeover time...... middle of paper...... Total FC $25,920 $45,920 $59,170 $45,920 $59,170 Volume d balance 213.88 246.03 140.32 246.03 140.32 Estimated with the purchase of $50,000 of permanent ToolsVariableMaterial $15.64 $15.64 $15.64 $15.64 $15.64Hand labor $11.64 $11.64 $11.64 $11.64 $11.64 Total Variable $27.28 $27.28 $27.28 $27.28 $27.28 Fixed OH at 360% Direct Labor $41.90 1.90 $41.90 $41.90 $41.90 Sales Force $0.00 $80.00 $133.00 $80.00 $133.00 *Total fixed cost $41.90 $121.90 $174.90 $121.90 $174.90 MF total cost $69.18 $149.18 $202.18 $149.18 $202.18 CM 56, $60 $122.06 $303.27 $122.06 $303.27 Price $125.78 $271.24 $505.45 $271.24 $505.45 Total FC 10 $475 $30.47 5 43 $725 $30,475 $43,725 Break-even volume 185.06 249.68 144.18 249.68 144.18*Sales force cost per unit= [(40,000*repetitions) / 12 months] /units per month