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 0.28 210675.00 0.28 280900.00 0.28 196397.73 0.32 161009.85
Ins
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