1. Calculate the overhead allocation rate for each of the years 2008-2014 and answer the following questions:

(Hint: Please see Exhibit 4 for information about Delhi allocates its overhead to each product line.)

2. Estimate the impact of discontinuing any one product line area on net operating income. Assume 2015 sales and direct material and labor costs remain unchanged from 2014 except for elimination of sales and avoidable costs (direct and indirect) related to the product line area of your choice. Show your work.

(Hint: Assume all information remains the same from 2014 to 2015, except for removal of the product line you identified. Recalculate overhead allocation rate.)

Exhibit 1 Employment and Properties 2014 2013 2012 2011 2010 2009 2008 164 161 155 143 110 117 167 37 44 37 39 10 12 20 Employees (total in thousands) Contract & temporary Hourly Engineering Other salaried 101 91 93 80 78 80 114 20 19 18 17 12 13 17 6 7 7 7 10 12 16 Manufacturing facilities 129 126 126 114 97 135 175 Sales offices & customer centers 96 94 90 82 74 91 136 Technical centers 15 15 15 15 14 15 16 Exhibit 2 Delhi Components Statement of Operations in billions) 2014 2013 2012 2011 2010 2009 2008 Sales 16.69 15.75 16.30 14.03 11.14 17.63 22.03 2.83 2.73 2.93 2.72 2.56 3.34 4.04 4.42 4.66 4.97 4.09 2.91 3.67 4.66 Electronics & safety Powertrain systems Electrical architecture Thermal systems Automotive holdings group 7.97 6.82 6.64 5.62 4.30 4.65 4.97 1.47 1.54 1.76 1.60 1.37 2.12 2.41 3.85 5.95 Direct costs 7.48 7.24 7.44 6.78 6.12 12.12 16.41 Overhead costs 7.55 7.19 7.11 6.41 5.98 7.43 9.14 Net operating income 1.66 1.32 1.75 0.84 -0.96 -1.92 -3.52 Exhibit 3 Direct Cost by Product Line Area (in billions) 2014 2013 2012 2011 2010 2009 2008 Direct labor costs 3.95 3.81 3.92 3.53 3.20 6.41 8.35 0.71 0.70 0.73 0.73 0.78 1.38 1.77 1.14 1.19 1.22 1.08 0.90 1.25 1.61 Electronics & safety Powertrain systems Electrical architecture Thermal systems Automotive holdings group 1.66 1.48 1.51 1.27 1.10 1.34 1.54 0.44 0.44 0.46 0.45 0.42 0.70 0.82 1.74 2.61 3.53 3.43 3.52 3.25 2.92 5.71 8.06 0.54 0.53 0.55 0.56 0.68 0.99 1.27 Direct materials Electronics & safety Powertrain systems Electrical architecture 1.31 1.38 1.40 1.26 0.94 1.48 2.06 1.38 1.22 1.24 1.11 0.99 1.22 1.57 0.30 0.30 0.33 0.32 0.31 0.47 0.64 Thermal systems Automotive holdings group 1.55 2.52 Exhibit 4 Net Operating Income by Product Line Area (in billions) 2014 2013 2012 2011 2010 2009 2008 Net operating income 1.66 1.32 1.75 0.84 -0.96 -1.92 -3.52 Electronics & safety 0.22 0.18 0.33 0.10 -0.36 -0.63 -0.94 Powertrain systems -0.21 -0.16 0.14 -0.21 -0.61 -0.51 -0.77 Electrical architecture 1.76 1.33 1.15 0.93 0.15 0.54 0.17 Thermal systems -0.11 -0.03 0.14 0.01 -0.14 0.14 0.05 Automotive holdings group -1.46 -2.04 Net operating income = Sales - Direct Costs - Allocated Overhead Costs. Overhead is allocated proportional to direct labor costs. Total net operating income may not exactly equal the sum of net operating income by line area because of rounding. Exhibit 5 Overhead Costs Break-Down (in billions) 2014 2013 2012 2011 2010 2009 2008 7.55 7.19 7.11 6.41 5.98 7.43 9.14 0.78 0.77 0.78 0.70 0.81 0.94 1.28 0.52 0.52 0.54 0.50 0.50 0.71 0.96 0.33 0.32 0.35 0.31 0.28 0.48 0.60 1.40 1.30 1.40 1.30 1.20 1.60 1.80 Overhead costs Indirect labor, tools, supplies Warehousing, receiving, shipping Utilities Manufacturing depreciation Maintenance and plant services Warranty costs Product design & development Depreciation & amortization Pension, health care obligations Selling, general & administration 0.42 0.39 0.42 0.43 0.47 0.49 0.52 0.42 0.35 0.28 0.21 0.10 0.32 0.41 1.65 1.60 1.40 1.20 1.10 1.00 1.40 0.80 0.72 0.75 0.61 0.54 0.45 0.60 0.58 0.57 0.57 0.56 0.56 0.99 1.05 0.65 0.65 0.62 0.59 0.42 0.45 0.52