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Morrissey Forgings
Group 7Archit Shukla 12P011
Swapnil Sheth 12P046Preetish Rao 12P094
1983 Income Stmt, Balance sheet, ROIIncome Statement 1983
Sales (30000 units) 90,00,000
Cost of Goods Sold 52,38,000
Gross Margin 37,62,000
Selling Cost 12,50,000
Shipping Cost 10,00,000
Sales Commissions 4,50,000
General Expenses 4,90,000
Profit Before Taxes\ 5,72,000
Tax (@40%) 2,28,800
PAT 3,43,200
Balance Sheet 1983
Assets 1,42,50,000
Factory Equipment 1,00,00,000
Trucks 20,00,000
Working Capital 22,50,000
ROI 2.41%
1985: Oven and Stove profitsIncome Statement Ovens Stoves Total
Sales 7000000 7500000 14500000
COGS 3867714.286 3982285.714 7850000
Gross Margin 3132285.714 3517714.286 6650000
Selling Cost 1388888.889 1736111.111 3125000
Shipping Cost 1666666.667 833333.3333 2500000
Sales Commission 350000 375000 725000
General Expenses 217777.7778 272222.2222 490000
PBT -491047.619 301047.619 -190000
1986: Income Stmt1986 Income statement
Units 30000SP per unit 350Sales Revenue 10500000Variable Overhead 3720000Fixed Overhead 2403000Gross Margin 4377000A&P cost 630000Order Getting Cost 2255000Shipping Cost 1785000Sales Commission 525000General Expenses 490000PBT -1308000
Shipping CostsShipping Cost
Shipping Cost in 1985 2500000
Stoves sold in 1985 in core 25000
Ovens sold in 1985 in core 5000
Ovens sold in 1985 in non-core 78
Shippig Cost in Core 1000000
Particulars Stove (units) Ovens(Units) Total Shipping Cost Per Unit shipping cost
Core 25000 5000 1000000 33.33333333
Non-Core 15000 1500000 100
833333 166667 1000000 100
33 133 833333
Order Getting costs
Stove selling cost per unit of core
Total ordering cost in 1983 902000
Stove units sold in 1983 30000
Per unit odering cost in core 30.06667
Total ordering cost in 1985 in core area 902000
Total ordering cost in 1985 in non core area 1353000
Per unit odering cost in non core 90.2
Break even analysis for ovensDetails OvensUnits 20,000 Material 45Labor 55Variable Overhead 5,65,714 VO per Unit 28 Fixed Overhead 13,02,000 Selling Price Per Unit 350 Variable Cost 128 Contribution margin 222 Selling Cost 13,88,889 Sellling Cost per Unit 69 Shipping Cost 133 General Expenses 2,17,778 Sales Commissions 3,50,000 Total Fixed Cost 59,25,267 Contribution margin 222 BEP 26,725
Recommendations
• Move out of stoves– Declining market, reducing profits, similar products
• Focus on ovens– First mover advantage– Brand building– Experience curve
• Expand into core area– Established presence– Good dealer network
Thank You
Appendix
Microsoft Office Excel Worksheet