Hilton Manufacturing Company

Hilton Manufacturing Company Should Product 103 have been dropped? (3 ship canal to see) 1) at sea sales ($5,202) Cost savings DL $1,341 Compensation restitution 67 DM 946 Power 59 Supplies 68 2,501 Repairs 20 Lost CM total impact of dropping ($2,701) 2) Loss eliminated Costs that anticipate Rent Property tax Property insurance Indirect pains Compensation ins. Light and heat Building service Selling get down General admin Depreciation Interest Other income Total impact 3) $404 $365 78 103 448 21 20 14 917 346 713 102 (10) 3,117 (2,703) nit CM (see later) Total impact doomed CM = 5. 3909 x 510,276 = $2,702 Which product is most remunerative? 101 VC DL Compensation insurance Power DM Supplies Repairs Total Selling harm CM/ social unit CM ratio . 1164 2. 3282 . 0403 1. 3766 . 0941 . 0319 3. 9875 9. 3084 5. 3209 57% . 1137 2. 2740 . 0929 1. 7542 . 1774 . 0557 4. 4709 9. 6900 5. 2191 53% . 1337 2. 6746 . 1171 1. 8862 . 1363 . 0396 4. 9875 10. 3784 5. 3909 52% Products 102 103 (If t he plant is near capacity of available direct labor hours) CM/capacity (LH) $2. 285/h 2. 95/h 2. 016/h Which is the most profitable product depends on the decision question and the corresponding criterion 2 Should price of 101 be dropped to $8. 64? VC unit costs forecasted 1991 vary DL 2. 3282 Compensation insurance . 1164 Power . 0403 Materials 1. 3766 +5% Supplies . 0941 +5% Repairs . 0319 unit costs 1992 2. 3282 . 1164 . 0403 1. 4454 . 0988 . 0319 Total 3. 9875 4. 0610 (cost increase 7% of heat and light is unattended because the increase is fixed regardless of the pricing decision) Price cash brush off (1. 8%) vc unit CM x units Total CM $9. 41 0. 1016 4. 0610 5. 2474 750,000 $3,935,550 $8. 64 . 0933 4. 0610 4. 4857 1,000,000 $4,485,700 What is the minimum quantity to conduct at $8. 64 to be not worse off than remaining at the $9. 41? 3,935,550/4. 4857 = 877,355 rim of safety 122,645 units What is the minimum quantity to sell at $9. 41 to be not worse off than reducing the price? 4,485,000/5,2474 = 854,842 need to sell 104,842 more units 3