Hanson-Manufacturing-Case-Study solution

Hanson Manufacuturing Company Name : Maniprakash B 09PGDM024

Roll No.:

QN.1) Product 101 Particulars

Total

Rent Property Taxes Property Insurance Compensation Insurance Direct Labour Indirect Labour Power Light and Heat Building Service Materials Supplies Repairs

Product 102 Total

Total

278 2333 755.9800333

195 1627.27741 537.3948974

1362.389465

1242.237041

30.94505495

37.71428571

Total Production Cost Selling Expense General Admn. Depreciation Interest

750 303 278 473 3960 1721 109 83 50 2605 221 69 10622

1607.540218 597.7860883

1196.308999 445.2475692

Total Cost Less Other Income

Actual Sales

Total Cost

3706 1378 2681 290 18677 42 18635

9279

Profir or Loss

6901

16180 -2455

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

2)

Item Rent Property Tax Property Ins

Product 101 Standar d per Total at cwt standard 0.30 225000.00 0.21 155917.67 0.19 142000.00

Product 101 Standar d per Total at cwt standard 0.23 225000.00 0.16 155917.67 0.14 142000.00

Product 102 Standar d per Total at cwt standard 0.32 225000.00 0.11 75360.21 0.10 69000.00

Product 103 Standar d per Total at cwt standard 0.60 300000.00 0.14 72241.85 0.13 66000.00

Compensation Ins

0.28

210675.00 1746075.0 0 859484.66 30225.00 24041.18

0.28

0.01

9.31

14948.45 1083993.7 5 74261.25 23925.00 4590546.9 6 1835412.3 8 682673.85 1084500.0 0 104838.13 8297971.3 3 21000.00 8276971.3 3 6981225.0 0

-1.38

1295746.3 3

Direct Labour Indirect Labour Power Light and Heat Building Service

2.33 0.79 0.04 0.03

Materials Supplies Repairs

1.45 0.10 0.03

Total prod cost Selling expense Gen Admin

5.77

Depreciation Interest

1.45 0.14

Total Cost Less Income

10.71 0.03

0.02

2.45 0.91

10.68 Actual Sales (Net)

P/L Unit sales

Item Rent Property Tax Property Ins Compensation Ins Direct Labour Indirect Labour Power Light and Heat Building Service Materials Supplies Repairs Total prod cost Selling expense Gen Admin Depreciation

2.33 0.79 0.04 0.02

1.45 0.10 0.03 5.58 1.84 0.68 1.08 0.10 9.29 0.02 9.27 8.38

-0.89

750000.00

Total Std (Op 1) 750000.00 303000.00 278000.00

Total Std (Op 2) 750000.00 303000.00 278000.00

568082.58 4705923.15 1721000.00 155492.84 80510.00 50000.00 3379790.42 269376.33 83175.85 12344351.18 3706000.00 1378000.00 2618000.00

638307.58 5287948.15 1721000.00 165567.84 80510.00 50000.00 3741121.67 294130.08 91150.85 13400736.18 3706000.00 1378000.00 2618000.00

280900.00 2328100.0 0 859484.66 40300.00 24041.18

0.28

14948.45 1445325.0 0 99015.00 31900.00 5646931.9 6 1835412.3 8 682673.85 1084500.0 0 104838.13 9354356.3 3 21000.00 9333356.3 3 8378524.0 0

0.02

954832.33 1000000.0 0

196397.73 1619035.1 1 413243.07 66367.91 24041.18

0.32 2.67 0.89 0.12 0.06

161009.85 1340813.0 4 448272.27 58899.93 32427.64

0.04

20103.09

1.96 0.14 0.04

6.08

14948.45 1313646.6 0 126540.53 39450.45 4183031.2 3

7.12

982150.07 68574.56 19800.40 3570292.7 1

1.30 0.48

922956.23 343262.28

1.89 0.70

947631.39 352063.87

1.15 0.11

1.40 0.21

9.69

821500.00 79802.16 6350551.8 9 10769.23 6339782.6 6 6900695.6 4

10.38

702000.00 105359.71 5677347.6 8 10230.77 5667116.9 1 5202342.5 8

0.58

560912.98

-0.93

464774.33

2.27 0.79 0.09 0.03

1.84 0.18 0.06

9.13 0.02 9.11

712102.00

11.33 0.02 11.31

501276.00

Interest Total Cost Less Income Actual Sales (Net) P/L Unit sales

290000.00 20336351.18 42000.00 20294351.18

290000.00 21392736.18 42000.00 21350736.18

19084263.22

20481562.22

-1210087.95

-869173.95

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 514827 712102 197275

Contribution -0.5516 0.5774 1.129

Product 102 contribution to Profit 222723.475