CASE ANALYSIS

FinePrint Company



Case Analysis: FinePrint Company

Introduction

The purpose of this study is to expand the boundaries of our knowledge by exploring some relevant facts figures relating to the selection of best alternative for FinePrint Company. John Johnson, owner of FinePrint Company, is presented with two opportunities to consider:

whether to accept a one-time special printing order, and

whether to outsource some of his printing to another printing company

In making his decisions, he must consider the relevance of certain costs, the behavior of those costs, and the extent to which he has capacity constraints (Colin, 2008). In this paper, we will evaluate the alternatives available and make recommendations as to the best course of action, and present it in a Report to him. In addressing his questions, we will consider the special order and the outsourcing opportunities as independent situations.

Issue Identification

John Johnson reflected on both offers he had received in the past couple of days. First, Abbie Jenkins, a friend of Johnson's and the owner of a small company in nearby Keswick, Virginia, had called to see if Johnson's printing company, FinePrint Company, could accommodate a special printing order next month. In addition, Ernest Bradley, the owner or a local one-room printing operation in Charlottesville, Virginia, called SmallPrint Shop, had stopped by to see if FinePrint Company could use some help printing color brochures over the next few months.

Monthly production at its Charlottesville facility was running at around full capacity of 150,000 brochures per month. John Johnson owned and managed the company. He employed one sales representative and one print rng press operator. The company typically priced its printing services at an average of' $17 per 100 brochures printed.

With reference to Abbie offer, John knew he didn't have the capacity at the moment to handle the special order. And, $10 per 100 brochures sounded low. John realized that with this order he wouldn't have to pay his sales representative the typical sales commission of $1 per 100 brochures, but that $1 savings wouldn't begin to make up for the lower price.

With reference to outsourcing offer, Ernest decided to stop by to deal with John Johnson, owner of FinePrint Company. His largest customer just informed him that it is closing its doors. He has been doing their color printing work for several years, and their closing leaves him with a lot of idle capacity. He was willing to go as low as $8 per 100 brochures. And he could handle 30,000 brochures for the company next month (Horngren et.al., 2003). John thought that $8 per 100 brochures sounded like a good deal. He wasn't sure that even he could print that cheaply. And he knew that SmaliPrint did a good job. He had used then before. They did high-quality work, and were dependable.

Alternative Generation and Evaluation

In this section, we will evaluate both the alternatives and analyze the impact of selecting each opportunity on the Net income of Fine Print. First, we will examine the first alternative provided in the assignment ...