Last year's sales of nearly 60,000 tons accounted for revenues of almost $30 million. Exhibit 3.1 gives a regional breakdown of sales. Exhibit 3.1 Last Year's Sales By Geographic Region San Francisco DC. This pattern results in very different profits in the various regions, ranging from around $40 per ton in Chicago to a slight loss in Philadelphia. The DC managers, whose annual bonus partly reflects the profits made in their region, have complained about this system for years. Exhibit 3.7 summarizes last year's records. Production and Distribution Facilities At present, Hollingsworth has four plants with one-shift capacities in the range of 12,00016,000 tons/year. At two of the four plants, production last year fell below one-shift capacity, while in the other two plants, a substantial amount of second-shift output was necessary. Fuhihit 2 on Diant ranaxitinn and Drandiantians a Includes a 4% sales commission. Expansion Proposals: One proposal involves a large addition to the St. Louis plant, while the second proposal involves construction of a new plant in Houston. The St. Louis proposal calls for an expansion of the existing plant sufficient to raise its annual one-shift capacity to 28,000 tons. The cost for the building for this expansion has been estimated at $1.6 million, and there is adequate land at the St. Louis site. The equipment investment is estimated to be $1.5 million. The plant expansion would afford Hollingsworth an opportunity to use the latest machinery available. The Houston proposal calls for building a new plant with annual one-shift capacity of 12,000 tons. Although Hollingsworth already has a DC located in Houston, there would be a need to purchase land for the new plant. The cost of land is estimated at $500,000. The plant itself would cost about $2 million, while the investment in equipment is estimated at $1.5 million, since the technology would be much the same as in the St. Louis expansion. Exhibit 3.8 shows additional estimates for the two Lxillill 0.2 ridm I Ixtu wusts proposals. As mentioned earlier, the Facilities Planning Committee anticipates that some kind of expansion will be needed to meet the needs of the market during the next 8-10 years. Over that period, the costs of labor, materials, and freight are likely to increase at slightly different rates, but the company controller has commented that the firm's cost structure is not likely to change drastically. uncer tns company pollcy, the Ivasnua piant supplles the boston and rnadeipnia ULs, Asnevile Which expansion proposal should we do? Last year's sales of nearly 60,000 tons accounted for revenues of almost $30 million. Exhibit 3.1 gives a regional breakdown of sales. Exhibit 3.1 Last Year's Sales By Geographic Region San Francisco DC. This pattern results in very different profits in the various regions, ranging from around $40 per ton in Chicago to a slight loss in Philadelphia. The DC managers, whose annual bonus partly reflects the profits made in their region, have complained about this system for years. Exhibit 3.7 summarizes last year's records. Production and Distribution Facilities At present, Hollingsworth has four plants with one-shift capacities in the range of 12,00016,000 tons/year. At two of the four plants, production last year fell below one-shift capacity, while in the other two plants, a substantial amount of second-shift output was necessary. Fuhihit 2 on Diant ranaxitinn and Drandiantians a Includes a 4% sales commission. Expansion Proposals: One proposal involves a large addition to the St. Louis plant, while the second proposal involves construction of a new plant in Houston. The St. Louis proposal calls for an expansion of the existing plant sufficient to raise its annual one-shift capacity to 28,000 tons. The cost for the building for this expansion has been estimated at $1.6 million, and there is adequate land at the St. Louis site. The equipment investment is estimated to be $1.5 million. The plant expansion would afford Hollingsworth an opportunity to use the latest machinery available. The Houston proposal calls for building a new plant with annual one-shift capacity of 12,000 tons. Although Hollingsworth already has a DC located in Houston, there would be a need to purchase land for the new plant. The cost of land is estimated at $500,000. The plant itself would cost about $2 million, while the investment in equipment is estimated at $1.5 million, since the technology would be much the same as in the St. Louis expansion. Exhibit 3.8 shows additional estimates for the two Lxillill 0.2 ridm I Ixtu wusts proposals. As mentioned earlier, the Facilities Planning Committee anticipates that some kind of expansion will be needed to meet the needs of the market during the next 8-10 years. Over that period, the costs of labor, materials, and freight are likely to increase at slightly different rates, but the company controller has commented that the firm's cost structure is not likely to change drastically. uncer tns company pollcy, the Ivasnua piant supplles the boston and rnadeipnia ULs, Asnevile Which expansion proposal should we do