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Hanson Manufacuturing Company

Name : Maniprakash B Roll No.:


09PGDM024

QN.1)

Product 101 Product 102 Total Cost

Particulars Total Total Total

Rent 750
Property Taxes 303
Property Insurance 278
Compensation Insurance 278 195 473
Direct Labour 2333 1627.27741 3960
Indirect Labour 755.9800333 537.3948974 1721
Power 109
Light and Heat 83
Building Service 50
Materials 1362.389465 1242.237041 2605
Supplies 221
Repairs 30.94505495 37.71428571 69

Total Production Cost 10622

Selling Expense 1607.540218 1196.308999 3706


General Admn. 597.7860883 445.2475692 1378
Depreciation 2681
Interest 290

Total Cost 18677


Less Other Income 42
18635

Actual Sales 9279 6901 16180

Profir or Loss -2455

If Hanson had discontinued Product 103 from January 1993, they would have
suffered an even bigger loss of 2.455 million.

2)

Product 101 Product 101 Product 102 Product 103


Standar Standar Standar Standar
d per Total at d per Total at d per Total at d per Total at
Item cwt standard cwt standard cwt standard cwt standard
Rent 0.30 225000.00 0.23 225000.00 0.32 225000.00 0.60 300000.00
Property Tax 0.21 155917.67 0.16 155917.67 0.11 75360.21 0.14 72241.85
Property Ins 0.19 142000.00 0.14 142000.00 0.10 69000.00 0.13 66000.00
Compensation
Ins 0.28 210675.00 0.28 280900.00 0.28 196397.73 0.32 161009.85
1746075.0 2328100.0 1619035.1 1340813.0
Direct Labour 2.33 0 2.33 0 2.27 1 2.67 4
Indirect Labour 0.79 859484.66 0.79 859484.66 0.79 413243.07 0.89 448272.27
Power 0.04 30225.00 0.04 40300.00 0.09 66367.91 0.12 58899.93
Light and Heat 0.03 24041.18 0.02 24041.18 0.03 24041.18 0.06 32427.64
Building
Service 0.02 14948.45 0.01 14948.45 0.02 14948.45 0.04 20103.09
1083993.7 1445325.0 1313646.6
Materials 1.45 5 1.45 0 1.84 0 1.96 982150.07
Supplies 0.10 74261.25 0.10 99015.00 0.18 126540.53 0.14 68574.56
Repairs 0.03 23925.00 0.03 31900.00 0.06 39450.45 0.04 19800.40
4590546.9 5646931.9 4183031.2 3570292.7
Total prod cost 5.77 6 5.58 6 6.08 3 7.12 1
Selling 1835412.3 1835412.3
expense 2.45 8 1.84 8 1.30 922956.23 1.89 947631.39
Gen Admin 0.91 682673.85 0.68 682673.85 0.48 343262.28 0.70 352063.87
1084500.0 1084500.0
Depreciation 1.45 0 1.08 0 1.15 821500.00 1.40 702000.00
Interest 0.14 104838.13 0.10 104838.13 0.11 79802.16 0.21 105359.71
8297971.3 9354356.3 6350551.8 5677347.6
Total Cost 10.71 3 9.29 3 9.13 9 11.33 8
Less Income 0.03 21000.00 0.02 21000.00 0.02 10769.23 0.02 10230.77
8276971.3 9333356.3 6339782.6 5667116.9
10.68 3 9.27 3 9.11 6 11.31 1
Actual Sales 6981225.0 8378524.0 6900695.6 5202342.5
(Net) 9.31 0 8.38 0 9.69 4 10.38 8

-
1295746.3 - -
P/L -1.38 3 -0.89 954832.33 0.58 560912.98 -0.93 464774.33
1000000.0
Unit sales 750000.00 0 712102.00 501276.00

Total Std Total Std


Item (Op 1) (Op 2)
Rent 750000.00 750000.00
Property Tax 303000.00 303000.00
Property Ins 278000.00 278000.00
Compensation
Ins 568082.58 638307.58
Direct Labour 4705923.15 5287948.15
Indirect Labour 1721000.00 1721000.00
Power 155492.84 165567.84
Light and Heat 80510.00 80510.00
Building Service 50000.00 50000.00
Materials 3379790.42 3741121.67
Supplies 269376.33 294130.08
Repairs 83175.85 91150.85
Total prod cost 12344351.18 13400736.18
Selling expense 3706000.00 3706000.00
Gen Admin 1378000.00 1378000.00
Depreciation 2618000.00 2618000.00
Interest 290000.00 290000.00
Total Cost 20336351.18 21392736.18
Less Income 42000.00 42000.00
20294351.18 21350736.18
Actual Sales
(Net) 19084263.22 20481562.22

P/L -1210087.95 -869173.95


Unit sales

They would suffer a higher loss if they sold the product at a higher price. So
they have no option but to reduce the price of the product.

3) Product 102 is Hanson's most profitable product. It has a profit margin of Re 0.57 per unit sold whereas the
other products are making a loss

4) In the first 6 months, the most profitable product, Product 102, has been sold more than the other products.

Compared to 1029654 units sold for the entire period of 1992, 712102 in the first 6 months of 1993.

Product 102
Sales Contribution contribution to Profit
514827 -0.5516
712102 0.5774
197275 1.129 222723.475