Colorscope case Exhibits

1. Compute the cost driver rates

2. Calculate and comment on your findings for:

i. Net Income for the company for the month.

ii. Net profit of each job. - before rework

Exhibit 1 Price trend of color separations to scan, assemble, proof and output printer specified film for a hypothetical direct mail catalog page with one image Price/Page of 1991 1992 1993 1994 1995 work ($): Colorscope 1,100 900 750 650 600 Service-Bureau2 400 425 450 475 500Exhibit 4 Time / Cost Breakdown for the Catalog Producer Direct mail catalogers constituted over 90% of Colorscope's customers. To produce an average project run, in this example, 1 million copies of a 52-page catalog, costs would break down as follows: Design {3 Photography (2 Prepress {2 Printing (3 days), Distribution {2-3 weeks), writing weeks), 200-300 weeks), 2 rounds cutting, binding, weeks), second copy, producing images, studio of proofs to the addressing for class bulk rate layouts, gaining and location project manager. national post. management shots. distribution approvals. $10,000 $50,000 $30,000 $1,300,000 $120,000 Exhibit 5 Top American Pre-press Competitors (does not include printers that have integrated forward) Company Sales Employees Facilities Primary Business (M$US) (sites) WACE USA 200 1,850 20 magazines, direct mail, packaging Applied Graphics Technologies 130 1,060 13 magazines, direct mail, packaging Black Dot Group 109 900 12 mags, dir. mail, packaging, books Schawk, Inc. 104 729 12 mags, dir. mail, packaging, agency American Color 76 840 16 mags, dir. mail, pkg, agncy, newsp Intaglio Vivi-Color 60 450 13 packaging Enteron Group 56 400 4 mags, dir. mail, pkg, agncy, books Kwik International 41 110 1 packaging, agency Color Associates 37 390 1 packaging, publishing, catalogs TSI Graphics 313 4 mags, dir. mail, packaging, books Blanks Color Imaging 24 230 1 mags, dir. mail, packaging, agency Kreber Graphics, Inc. 22 165 2 mags, dir. mail, pkg, agncy, retail\fExhibit 9 Hours clocked at different workstations in June 1996* Job Quality JOB # Preparation Scanning Assembly Output Control Total 61001 4 32 42 8 93 61002 24 38 81 61003 40 75 16 146 61101 16 30 58 61102 16 28 56 61201 16 32 62 61202 32 58 110 61203 34 64 118 61204 30 58 110 61301 250 61401 AADA NOOO 61402 61403 61404 61405 61501 61502 61601 61602 61603 NG 56 6 8:58598 61701 - UIWH 61702 HAPNAAN 61801 20 61901 21 61902 75 62001 6 Idle Time 43 28 128 37 13 249 Capacity 160 640 1280 200 160 2440 Hours clocked in different work stations include rework hours given in Exhibit 10.Exhibit 10 Rework hours* Rework due to change in specifications by customer Job Quality JOB # Preparation Scanning Assembly Output Control Total 61001 16 10 32 61002 6 21 61301 10 21 61502 8 JOONWN JOHNOO 14 61801 5 61901 6 Total 35 41 12 99 Quality Control initiated rework of house errors Quality JOB # Job Preparation Scanning Assembly Output Control Total 61301 4 10 61402 16 29 61403 10 14 CNN 27 61603 3 3 8 Total 2 25 37 6 74 In all four jobs that were subsequently reworked because Quality Control initiated rework, the original defects were introduced in the scanning stage of the operation. However, when a job is rescanned, assembly, output, and quality control all have to be redone.Exhibit 11 Selected Financial Information for June 1996" Job Quality Description Preparation Scanning Assembly Output Control Idle Total Wages $8,000 $32,000 $64,000 $10,000 $11,000 $125,000 Depreciation $500 $25,000 $10,000 $14,000 $500 $50,000 Rent $30,000 Others $20,000 Total Overhead $225,000 Floor Space in 54- ft. 1000 1000 4000 2000 500 6.500 15.000 Exhibit 12 Materials expense in June 1996" Total Materials Customer Correction of house Job # expense Initiated rework error 61001 $ 5,400 $2,700 61002 3,500 1,100 61003 4,500 61101 1,800 61102 1,500 61201 1,500 61202 3,300 61203 3,400 61204 3,200 61301 13,000 1,000 $1,000 61401 1,800 61402 3,100 1,000 61403 3,900 1,000 61404 2,100 61405 2000 61501 2200 61502 3,600 1,500 61601 3,300 61602 600 61603 1,000 500 61701 2100 61702 2,500 61801 1,600 1,000 61901 1,700 1,000 61902 2,200 62001 200 Total $75,000 $8,300 $3,500