You are on page 1of 10

Exhibit 2: Hilton Manufacturing Company

Analysis of Profit and Loss by Product, Year Ended 12/31/2003


Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $
Rent $ 721 0.3381 $ 603 0.5856 $ 718 0.7275 $ 2,042
Property taxes 240 0.1126 192 0.1865 153 0.1550 585
Property
insurance 201 0.0943 153 0.1486 202 0.2047 556
Compensation
insurance 317 0.1487 167 0.1622 172 0.1743 656
Direct labor 4,964 2.3281 2,341 2.2736 2,640 2.6748 9,945
Indirect labor 1,693 0.7940 814 0.7906 883 0.8947 3,390
Power 86 0.0403 96 0.0932 116 0.1175 298
Light and heat 57 0.0267 49 0.0476 39 0.0395 145
Building service 38 0.0178 30 0.0291 28 0.0284 96
Materials 2,935 1.3765 1,809 1.7569 1,862 1.8866 6,606
Supplies 201 0.0943 183 0.1777 135 0.1368 519
Repairs 68 0.0319 57 0.0554 39 0.0395 164
Total 11,521 5.4034 6,494 6.3070 6,987 7.0792 25,002
Selling expense 3,496 1.6396 1,758 1.7074 1,805 1.8288 7,059
General
administration 1,324 0.6210 499 0.4846 681 0.6900 2,505
Depreciation 2,169 1.0173 1,643 1.5957 1,404 1.4225 5,216
Interest 201 0.0943 153 0.1486 202 0.2047 556
Total costs 18,711 8.7755 10,547 10.2432 11,079 11.2252 40,337
Net sales 19,847 9.3083 9,977 9.6897 10,243 10.3782 40,067
Profit (loss) 1,136 0.5328 (570) (0.5536) (836) (0.8470) (270)
Unit sales 2,132.191 1,029.654 986.974 4,148.819
Quoted sales
price/cwt $ 9.41 $ 9.91 $ 10.56

Cash discounts
taken [pct of
sales price] 1.08% 2.22% 1.72%

Database criteria range to extract total variable costs


Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $

Database criteria range to extract total fixed costs


Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $

Extracted total
variable costs $ 8,571 $ 4.0198 $ 4,653 $ 4.5190 $ 4,964 $ 5.0295 $ 18,188
Extracted total
fixed costs $ 10,140 $ 4.7557 $ 5,894 $ 5.7243 $ 6,115 $ 6.1957 $ 22,149
Database criteria range to extracted direct labor costs
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $
Extracted total
direct labor
costs $ 4,964 $ 2.3281 $ 2,341 $ 2.2736 $ 2,640 $ 2.6748 $ 9,945
Database criteria range to extracted direct material costs
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $

Extracted total
direct material
costs $ 2,935 $ 1.3765 $ 1,809 $ 1.7569 $ 1,862 $ 1.8866 $ 6,606
Database criteria range to extracted overhead costs
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $

Extracted total
overhead costs $ 5,791 $ 2.7160 $ 3,987 $ 3.8722 $ 3,889 $ 3.9403 $ 13,667
Database criteria range to extracted selling and administrative costs
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $

Extracted total
selling and
administrative
expenses $ 5,021 $ 2.3549 $ 2,410 $ 2.3406 $ 2,688 $ 2.7235 $ 10,120
Database criteria range to extracted revenues
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt Total $

Extracted total
revenues $ 19,847 $ 9.3083 $ 9,977 $ 9.6897 $ 10,243 $ 10.3782 $ 40,067
Cost
Behavior Category
F O
F O

F O

V O
V L
F O
V O
F O
F O
V M
V O
V O

F S

F S
F O
F S

Cost
Behavior Category
V

Cost
Behavior Category
F

Cost
Behavior Category
L

Cost
Behavior Category
M

Cost
Behavior Category
O

Cost
Behavior Category
S

Cost
Behavior Category
R
Income Statement
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt
Revenue $ 19,847 $ 9.3083 $ 9,977 $ 9.6897 $ 10,243 $ 10.3782
Extract Total
Variable Cost 8,571 4.0198 4,653 4.5190 4,964 5.0295

Contribution
Margin per unit 11,276 5.2885 5,324 5.1707 5,279 5.3487
Extract Total
Fixed Cost 10,140 4.7557 5,894 5.7243 6,115 6.1957
Net Income 1,136 0.5328 (570) (0.5536) (836) (0.8470)

Break-even Point
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt
Contribution
Margin 11,276 5.2885 5,324 5.1707 5,279 5.3487
Unit Sales 2,132.191 1,029.654 986.974
Sale Mix 51.39% 24.82% 23.79%

Weighted
Average
Contribution
Margin $ 2.7179 $ 1.2833 $ 1.2724
Break-even in
units 1.75 4.46 4.87
Breakdown of
required units
sales 2,158.50 1,042.36 999.15
Revenues
@BE $ 20,092 $ 10,100 $ 10,369

Units (short) or
over in 2003 $ (26.31) $ (12.71) $ (12.18)

Hilton Manufacturing
Analysis of production line net income under alternative cost allocation systems
Overhead Original Production
allocation allocation DL $ DM $ volume
procedure 1 2 3 4
Enter value
here 1
Thousands 101: $ Per Thousands 102: $ Per Thousands 103: $ Per
Line item Pro 101 Cwt Pro 102 Cwt Pro 103 Cwt
Units sold $2,132.191 $1,029.654 $986.974
Revenues $19,847 $9.3083 $9,977 $9.6897 $10,243 $10.3782
Direct labor $4,964 $2.3281 $2,341 $2.2736 $2,640 $2.6748
Direct material $2,935 $1.3765 $1,809 $1.7569 $1,862 $1.8866
Overhead $5,791 $2.7160 $3,987 $3.8722 $3,889 $3.9403
Total COGS $13,690 $6.4206 $8,137 $7.9027 $8,391 $8.5017
Gross margin $6,157 $2.8876 $1,840 $1.7870 $1,852 $1.8764
Selling &
Administrative
expenses $5,021 $2.3549 $ 2,410 $2.3406 $2,688 $2.7235
Net Income $1,136 $0.5328 -$570 -$0.5536 -$836 -$0.8470
Overhead
Overhead Overhead rate based on
rate based rate based production
on DL $ on DM $ volume
Overhead cost $ 13,667 $ 13,667 $ 13,667
DL $ $ 9,945 $ 6,606 $ 4,149
Overhead rate 1.3743 2.0689 3.2942

Alternative net income


Thousands Thousands Thousands
Net income Pro 101 Pro 102 Pro 103
1 $1,136 -$570 -$836
2 $105 $200 -$575
3 $855 -$326 -$799
4 -$97 $25 -$198

Alternative Cost Allocation


$1,500

$1,000
Net Income

$500 Thousands Pro 101


Thousands Pro 102
$0 Thousands Pro 103
1 2 3 4
-$500

-$1,000
Product
Total $
$ 40,067

18,188

21,879

22,149
(270)

Total $

21,879
4,148.819
100.00%

$ 5.2735

4,200.02

4,200.02

$ 40,561

$ (51.20)

on systems

Total $
$4,148.819
$40,067
$9,945
$6,606
$13,667
$30,218
$9,849

$10,120
-$270
direct labor cost direct material cost Production volume
total overhead rate 1.3743 2.0689 3.2942
product 101 product 102 product 103 Total
Given $ 5,791 $ 3,987 $ 3,889 $ 13,667
direct labor 6,822 3,217 3,628 13,667
direct material 6,072 3,743 3,852 13,667
production volume 7,024 3,392 3,251 13,667

Allocation of total ohd cost to each product overhead cost


product 101 product 102 product 103 Total
Given $ 2.7160 $ 3.8722 $ 3.9403 $ 10.5285
direct labor 3.1994 3.1245 3.6759 9.9999
direct material 2.8478 3.6348 3.9031 10.3857
production volume 3.2942 3.2942 3.2942 9.8826

Percentage change on per unit basis


product 101 product 102 product 103
direct labor cost 17.80% -19.31% -6.71%
direct material cost 4.86% -6.13% -0.95%
production volume 21.29% -14.93% -16.40%

Overhead Allocation
$5.0000
$4.0000
$3.0000
$2.0000
$1.0000 product 101
$- product 102
Given

direct material

production volume
direct labor

product 103

Percentage per units


25.00%
20.00%
15.00%
10.00%
Percentage

5.00% direct labor cost


0.00% direct material cost
-5.00% 1 2 3 production volume
-10.00%
-15.00%
-20.00%
-25.00%
Product
5.00% direct labor cost

Percenta
0.00% direct material cost
-5.00% 1 2 3 production volume
-10.00%
-15.00%
-20.00%
-25.00%
Product

You might also like