Question

This question is about Sanyo Case, similar to the case covered in class. Based on data below please answer the following question:

If San-pod is assembled in China, what is the unit freight cost in shipping to Germany?

Costs, demand, weight, and tariff data

Annual demand for San-pod in Germany: 30,000

Annual demand for San-pod in USA: 10,000

Labor costs

China ($): $3 per unit;   Greece ($): $4.5 per unit; Mexico ($): $5 per unit

Product weight per unit

Assembled San-pod (g): 90

Part A from Malta (g): 50

Part B from Japan (g): 40

Product purchase price

Part A FOB Malta ($ per unit): $10

Part B FOB Japan ($ per unit): $30

Tariff rates (%):

Japan 6%; China 7%; Mexico 8%; USA 5%; Greece 7%; Germany 7%

Combined rates for transportation and insurance between respective points (I&F $ per 100g)

Malta to Greece: 0.6

Malta to China: 2.2

Malta to Mexico: 2.5

China to Germany: 2.3

China to USA: 2.75

Greece to Germany: 0.6

Greece to USA: 2.5

Mexico to Germany: 0.8

Japan to China: 0.8

Japan to Greece: 2.5

Mexico to USA: 0.4

Japan to Mexico: 2.3

Answer choices

$2.07

$3.24

$2.30

$3.21

* The correct answer is 2.07, I just need an easy explanation for future use please.

Answer 1

If San-pod is assembled in China, what is the unit freight cost in shipping to Germany?
Frieght cost includes cost of shipping and insurance.
As per data , freight cahrge from China to Germany: $ 2.3 for 100 grams
Weight of a San Pod= 90 grams
Annual demand in Germany = 30,000
Annual demand in weight = 30000 *90 = 2700000 grams
Annual freight cost = 2,700,000 grams/ 100 grams * $2.3 = $ 62100

Note : please give like thnks
Frieght cost per unit = 62100/30,000 = $ 2.07