Product Profitability Analysis (March 2006) Valve s Pumps Flow Controllers $12.35 16.00 22.85 $5120 Direct labor cost Direct material cost Manufacturing overhead (@185%) Standard unit costs Target selling price Planned gross margin (%) Actual selling price Actual gross margin Actual gross margin (%) $78.77 35% $79.00 $27.80 35% $16.25 20.00 30.06 $66.31 $102.0 2 35% $70.00 $3.69 5% $13.00 22.00 24.05 $59.05 $90.85 35% $95.00 $35.95 38% Direct labor costs were charged at $32.50 per hour. The average daily compensation for days worked was $195 per day ($3,900 per month divided by 20 working days per month). The hourly rate was calculated by dividing $195 by the six hours per day available for productive work. Product Data Valves Pumps Flow Controllers Product Lines Materials per unit 4 components 2 @ $2$ 4 26 = 12 5 components 3@$2$6 27 = 14 10 components 4@ $1 = $4 5 @ 210 1 @ 8 = 8 $22 0.40 DL hours 0.3 12 Materials cost per unit Direct labor per unit Machine hours per unit Setup hours per run $16 0.38 DL hours 0.5 5 $20 0.50 DL hours 0.5 Monthly Production and Operating Statistics (March 2006) Valves Pumps Flow Controllers Total Production (units) Machine hours (run time) Production runs Setup hours (labor and machines) Number of shipments Hours of engineering work 7,500 3,750 20 100 40 60 12 500 6.250 100 600 100 240 4,000 1.200 225 2,700 200 600 24,000 11,200 345 3,400 340 900 REQUIREMENT SHOW WORKINGS, HOW THE FOLLOWING WAS CALCULATED BELOW I. Direct Labor Expenses II. Direct Material Expenses III. Machine Related Expenses IV. Setup labor Receiving and production VI. Engineering Overhead VII. Packaging and Shipping VIII. General, Selling & Administrative Expenses V. Sales Sippican Corporation: Operating Results (March 2006) $1.847.500 100% Direct Labor Expense 351,000 Direct Materials Expense 458.000 Contribution Margin $1.038.500 56% Manufacturing Overhead Machine-related expenses $334,800 Setup labor 117,000 Receiving and production control 15,600 Engineering 78,000 Packaging and shipping 109.200 Total Manufacturing Overhead Gross Margin General Selling & Administrative Expenses Operating Income (pre-tax) 35% 654.600 383.900 350.000 21% 19% 1.8% Product Profitability Analysis (March 2006) Valve s Pumps Flow Controllers $12.35 16.00 22.85 $5120 Direct labor cost Direct material cost Manufacturing overhead (@185%) Standard unit costs Target selling price Planned gross margin (%) Actual selling price Actual gross margin Actual gross margin (%) $78.77 35% $79.00 $27.80 35% $16.25 20.00 30.06 $66.31 $102.0 2 35% $70.00 $3.69 5% $13.00 22.00 24.05 $59.05 $90.85 35% $95.00 $35.95 38% Direct labor costs were charged at $32.50 per hour. The average daily compensation for days worked was $195 per day ($3,900 per month divided by 20 working days per month). The hourly rate was calculated by dividing $195 by the six hours per day available for productive work. Product Data Valves Pumps Flow Controllers Product Lines Materials per unit 4 components 2 @ $2$ 4 26 = 12 5 components 3@$2$6 27 = 14 10 components 4@ $1 = $4 5 @ 210 1 @ 8 = 8 $22 0.40 DL hours 0.3 12 Materials cost per unit Direct labor per unit Machine hours per unit Setup hours per run $16 0.38 DL hours 0.5 5 $20 0.50 DL hours 0.5 Monthly Production and Operating Statistics (March 2006) Valves Pumps Flow Controllers Total Production (units) Machine hours (run time) Production runs Setup hours (labor and machines) Number of shipments Hours of engineering work 7,500 3,750 20 100 40 60 12 500 6.250 100 600 100 240 4,000 1.200 225 2,700 200 600 24,000 11,200 345 3,400 340 900 REQUIREMENT SHOW WORKINGS, HOW THE FOLLOWING WAS CALCULATED BELOW I. Direct Labor Expenses II. Direct Material Expenses III. Machine Related Expenses IV. Setup labor Receiving and production VI. Engineering Overhead VII. Packaging and Shipping VIII. General, Selling & Administrative Expenses V. Sales Sippican Corporation: Operating Results (March 2006) $1.847.500 100% Direct Labor Expense 351,000 Direct Materials Expense 458.000 Contribution Margin $1.038.500 56% Manufacturing Overhead Machine-related expenses $334,800 Setup labor 117,000 Receiving and production control 15,600 Engineering 78,000 Packaging and shipping 109.200 Total Manufacturing Overhead Gross Margin General Selling & Administrative Expenses Operating Income (pre-tax) 35% 654.600 383.900 350.000 21% 19% 1.8%