Hanson-Manufacturing-Case-Study solution
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Hanson Manufacuturing Company Name : Maniprakash B Roll No.: 09PGDM024 QN.1) Particulars Product 101 Product 102 Total Cost 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
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Transcript of Hanson-Manufacturing-Case-Study solution
Hanson Manufacuturing Company
Name : Maniprakash B Roll No.: 09PGDM024
QN.1)
Particulars
Product 101 Product 102 Total Cost
Total Total Total Rent 750Property Taxes 303Property Insurance 278Compensation Insurance 278 195 473Direct Labour 2333 1627.27741 3960Indirect Labour 755.9800333 537.3948974 1721Power 109Light and Heat 83Building Service 50Materials 1362.389465 1242.237041 2605Supplies 221Repairs 30.94505495 37.71428571 69 Total Production Cost 10622 Selling Expense 1607.540218 1196.308999 3706General Admn. 597.7860883 445.2475692 1378Depreciation 2681Interest 290 Total Cost 18677Less 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
Item
Standard per cwt
Total at standard
Standard per cwt
Total at standard
Standard per cwt
Total at standard
Standard per cwt
Total at standard
Rent 0.30 225000.00 0.23 225000.00 0.32 225000.00 0.60 300000.00Property Tax 0.21 155917.67 0.16 155917.67 0.11 75360.21 0.14 72241.85Property Ins 0.19 142000.00 0.14 142000.00 0.10 69000.00 0.13 66000.00Compensation 0.28 210675.00 0.28 280900.00 0.28 196397.73 0.32 161009.85
Ins
Direct Labour 2.331746075.0
0 2.332328100.0
0 2.271619035.1
1 2.671340813.0
4Indirect Labour 0.79 859484.66 0.79 859484.66 0.79 413243.07 0.89 448272.27Power 0.04 30225.00 0.04 40300.00 0.09 66367.91 0.12 58899.93Light and Heat 0.03 24041.18 0.02 24041.18 0.03 24041.18 0.06 32427.64Building Service 0.02 14948.45 0.01 14948.45 0.02 14948.45 0.04 20103.09
Materials 1.451083993.7
5 1.451445325.0
0 1.841313646.6
0 1.96 982150.07Supplies 0.10 74261.25 0.10 99015.00 0.18 126540.53 0.14 68574.56Repairs 0.03 23925.00 0.03 31900.00 0.06 39450.45 0.04 19800.40
Total prod cost 5.774590546.9
6 5.585646931.9
6 6.084183031.2
3 7.123570292.7
1Selling expense 2.45
1835412.38 1.84
1835412.38 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
Depreciation 1.451084500.0
0 1.081084500.0
0 1.15 821500.00 1.40 702000.00Interest 0.14 104838.13 0.10 104838.13 0.11 79802.16 0.21 105359.71
Total Cost 10.718297971.3
3 9.299354356.3
3 9.136350551.8
9 11.335677347.6
8Less Income 0.03 21000.00 0.02 21000.00 0.02 10769.23 0.02 10230.77
10.688276971.3
3 9.279333356.3
3 9.116339782.6
6 11.315667116.9
1Actual Sales (Net) 9.31
6981225.00 8.38
8378524.00 9.69
6900695.64 10.38
5202342.58
P/L -1.38
-1295746.3
3 -0.89-
954832.33 0.58 560912.98 -0.93-
464774.33
Unit sales 750000.00 1000000.0
0 712102.00 501276.00
ItemTotal Std (Op 1)
Total Std (Op 2)
Rent 750000.00 750000.00Property Tax 303000.00 303000.00Property Ins 278000.00 278000.00Compensation Ins 568082.58 638307.58Direct Labour 4705923.15 5287948.15Indirect Labour 1721000.00 1721000.00Power 155492.84 165567.84Light and Heat 80510.00 80510.00Building Service 50000.00 50000.00Materials 3379790.42 3741121.67Supplies 269376.33 294130.08Repairs 83175.85 91150.85Total prod cost 12344351.18 13400736.18Selling expense 3706000.00 3706000.00Gen Admin 1378000.00 1378000.00Depreciation 2618000.00 2618000.00Interest 290000.00 290000.00
Total Cost 20336351.18 21392736.18Less Income 42000.00 42000.00 20294351.18 21350736.18Actual Sales (Net) 19084263.22 20481562.22 P/L -1210087.95 -869173.95Unit 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.
Sales Contribution
Product 102 contribution to
Profit514827 -0.5516712102 0.5774197275 1.129 222723.475
