Tork Corporation Case Harvard Case Solution & Analysis

Question No. 3: Cost of LG for Model F

In this question, we are required to estimate the cost for Model F of LG. The calculations are shown in the excel file in spreadsheet 2. It can be seen that the estimation is done on the basis of percentage increase. We have first calculated the percentage increase for Tork Corporation from model A to model F and then, we have assumed that the same percentage increase would be realized by LG for Model F.

The assumptions are as follows.

• The percentage increase in labor cost is assumed to be 34.27%, on the basis of percentage increase in labor cost of Tork.
• The percentage increase in material cost is assumed to be 113.29%, on the basis of percentage increase in material cost of Tork.
• The percentage increase in overhead cost is assumed to be 46.9%, on the basis of percentage increase in overhead cost of Tork.

Another important thing to note here is that the shipment charges are not calculated for Tork Cooperation as its shipment charges are only $5. For the calculation of shipment charges of LG, we have first calculated the percent of shipment cost in the total cost of model A, then by using the following equations, we have estimated the shipment cost for model F.

The total cost of model F of LG Electronics is 410.93 dollars, which is 97 dollars less than the total cost of model F of Tork Corporation....

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