Net sales for August 2015 increased $21.9k or 3.9% as compared to the year ago period, primarily as a result of higher Bimba sales. Bimba sales rose 33.0% from August 2014 accounting for 77.2% of total sales for the month. Net purchases ended the month at 22.7% of sales compared with 25% for forecast and 26.9% for August 2014. Lower raw material costs were largely attributable to a favorable sales mix and preferred pricing on our 6042 aluminum. August 2015 turnings revenue of $7.2k came in $2.8k under forecast and $32K under turnings revenue reported in August 2014. Aluminum scrap pricing dropped 40.9% to $0.26/lb in the current month. In addition, August 2014 included $22k in brass revenue. Direct labor costs increased from $149.8k in August 2014, representing 35.2% of sales to $217.7k in August 2015, representing 37.6% of sales. The increase in direct labor expense is reflective of a 19.3% increase in direct labor headcount and higher wage related expenses of $31.7k. August 2015 labor cost associated with product sold ended at 26.4% of sales up from 24% in August 2014. OSP costs were $20k representing 3.5% of sales in July 2015 relatively unchanged from July 2014. OSP costs remained relatively flat year-over-year. Subcontract costs for direct labor include wages for 3 temporary headcount. August 2015 expendable tooling costs hit $14.8k or 2.6% of sales down 15.1% compared with the same period a year ago. The current month includes $5.3k of first run tooling for new products. …show more content…
The positive effect on gross margin from higher sales volume and a favorable shift in product mix were offset by increased labor costs and lower turnings revenue. Operating expense increased from $102k or 19.5% of sales to $107.6k or 18.6% of sales. August 2015 includes a charge of $10k for an employee bonus awarded to all Calumet
Although the company did show an increased gross profit of $8,255,000 with $6,358,000 less Net Sales in 2013 versus 2012, that increase is due to the reduction in product Cost of Goods Sold by $14,613,000. Since increases in product price will negatively affect sales, one of management’s primary goals is to keep prices stable. This objective is achieved through implementation of cost cutting programs, investing in more efficient equipment, and automation of more steps in the production process.
Between years 6 and 7 CBI’s Net Sales increased by 33.3% for a change of $1,495,000. The increase of 33% indicates strength for the company because it means that the
The wages of general production employees who are idled due to machine breakdown are classified as indirect costs. Direct costs are usually variable and change as production volumes change. Thus, direct materials and direct labor are typically variable costs. For special orders, some direct costs can be fixed, however. The costs (depreciation, electricity, and routine maintenance) associated with a machine dedicated to one product are direct costs of that product. Indirect costs cannot be easily and conveniently assigned to a special order. Rather, these costs are common costs, in that they are incurred to produce a variety of special orders. Maintenance costs of general purpose equipment, the supervisor’s salary, and utilities are direct costs needed to produce special orders in general, but are indirect costs for a particular special order. Moreover, general production costs, including property taxes, insurance, lawn care, cafeteria costs, and miscellaneous supplies consumed in production are indirect costs properly allocated to special orders manufactured.
Wilkerson employs a Normal Cost System, which means that they use predetermined overhead rates along with actual costs for direct material and direct labor. Normal costing systems are appropriate when overhead costs are a relatively small percentage of total manufacturing costs and product diversity is limited. For Wilkerson, normal costing does not make sense. Overhead costs make up over 50 percent of total manufacturing costs and their product offering is relatively more diverse. This indicates that the current accounting system in place may be distorting costs significantly. Supporting data:
The change in the contribution margin for all the products is responsible for the change in profitability.
Account/Description Manufacturing overhead Cost of goods sold Actual overhead costs Incurred on account Indirect materials Indirect labor Depreciation $120,000 14,000 20,000 8,000 $162,000 Applied overhead costs Job 7640 Job 7641 Job 7642 $43,200 57,600 66,000 $166,800 $162,000 166,800 $4,800
The top four expenses of Blackmores in the three years were the cost of raw materials and consumables used, employee benefits expense, selling and marketing expenses and promotional and other rebates. All the four expenses increased gradually in the three years. The cost of raw materials and consumables used raise from $ 65,748 to $ 76,551 while employee benefits expense increased from $ 48,179 to $ 54,910. The costs of selling and marketing expenses and promotional and other rebates increased to$ 24,462 and $ 32,478 respectively from both around $ 19,000.
In review of the operating costs, overhead and administration have increased by 8% from 2008-2011 or $116,870. In addition salary dollars continue to increase from 2008-2011 by $111,150 with no efforts to flex. The other expenses are staying steady in proportion to gross revenues. There may be opportunities in these areas however salaries and overhead is the greatest opportunity to scale back costs and contribute to increased net income and ultimately positive cash flows. Flexing salaries and benefit to 44% of gross revenue and reducing overhead and expenses to 10% of gross revenue is recommended for Ms. Ringer to increase net income to $152,956 and equity to $240,214 (exhibit Operating Statements-2012 proforma).
The overall 8 percent growth in sales and revenues were accomplished in a year when end markets in the United States were weak. Considering that North American dealers took machine inventories down $1.1 billion in 2007, the sales story is even more impressive. For the year, sales and revenues increased $3.441 billion —$1.271 billion from higher sales volume including $775 million from the acquisition of Progress Rail, $932 million from improved price realization, $890 million
Cost – HD’s cost of goods sold has increased from 1991 to 1995 due to expansion of production. Similarly, the cost of selling, admin and engineering has also increased.
Total profit show a positive increase from 18% in 2013 to 31% in 2015, far reaching the brothers’ preference of $1.1 M in 2015, Appendix 3 showed $1.4 M net profit
Operating expenses includes production costs, such as direct labor, indirect labor, inventory carrying costs, equipment depreciation, materials and supplies used in production, and administrative cost. This was not happening at Alex’s plant. His inventories had increased over the past six or seven months and operational expense also increased. This meant he had a lot of work to do to keep his plant open and he was now aware of it.
Its activity during 2008 as measured by the cost of goods sold was $74,000 (COGS). It therefore had an inventory of turnover of 2.55 (74,000/29,000) times. This represents an improvement from 2.04 (43,000/21,000) times in 2005.
A direct cost can be traced to a product or service which includes: Direct labor- which is the cost of the labor that’s directly connected to a product or services. Direct labor is sometimes called touch labor, since direct labor workers typically touch the product while it is being made.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 39-40) An example of direct labor is an assembly line worker. Labor cost that cannot be physically traced to the creation of products, or that can be traced only at great cost and inconvenience, are considered to be indirect labot.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 40) Direct material are those materials that become an integral part of the finished product and whose cost can be traced to the finished product.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p39-40) Manufacturing overhead is the third element so manufacturing cost, it includes all costs of manufacturing except direct materials and direct labor. Manufacturing overhead includes items such as indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on manufacturing facilities. Only cost associated with operating the factory are consider to be manufacturing overhead cost. A company also incurs other costs associated with its selling administive functions, but these costs are not included as part of manufacturing overhead. Only those
Also, the gross profit had a lower increase(+9.67%), that means the cost of sales increased more than the revenue increase in term of percentage. There was a 13.16% rose in net operating expense as both selling and distribution costs and administrative expenses increased. One of the reasons why net operating expense increased because the firm had a programme of reinvesting for organic growth which supply chain, IT and store portfolio had improved. The rose of the net operating expense lead to a 2.13% drop in the operating