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  • Midwest Office Product

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    gaurav_ajmani
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    This document contains financial data for Midwest Office Product for January to December 2003, including sales, costs of goods sold, expenses, margins, and metrics on orders. It then calculates per unit costs for various expenses like personnel, transportation, warehousing, and order entry. Finally, it identifies key issues like rethinking direct delivery for small orders, changing payment terms, and increasing electronic ordering to reduce costs. The goal is to increase profitability for the company.

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    This document contains financial data for Midwest Office Product for January to December 2003, including sales, costs of goods sold, expenses, margins, and metrics on orders. It then calculates per unit costs for various expenses like personnel, transportation, warehousing, and order entry. Finally, it identifies key issues like rethinking direct delivery for small orders, changing payment terms, and increasing electronic ordering to reduce costs. The goal is to increase profitability for the company.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Scarica in formato DOCX, PDF, TXT o leggi online su Scribd
    Segnala contenuti inappropriati
    1K visualizzazioni1 pagina

    Midwest Office Product

    Caricato da

    gaurav_ajmani
    This document contains financial data for Midwest Office Product for January to December 2003, including sales, costs of goods sold, expenses, margins, and metrics on orders. It then calculates per unit costs for various expenses like personnel, transportation, warehousing, and order entry. Finally, it identifies key issues like rethinking direct delivery for small orders, changing payment terms, and increasing electronic ordering to reduce costs. The goal is to increase profitability for the company.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Scarica in formato DOCX, PDF, TXT o leggi online su Scribd
    Segnala contenuti inappropriati
    di 1

    Gaurav Ajmani

    Indian Institute of Management, Ahmadabad


    Global Management Program 9th Batch, Dubai
    Midwest Office Product
    Particulars
    Sales
    COGS
    Gross Margin
    Per Exps (W/H)
    Per Exps (Truck Drivers)
    W/H Exps (Excl Pers)
    Freight
    Delivery Truck Expenses
    Order Entry Expenses
    Gen & Selling
    Interest Expenses
    Net Income
    No. of Cartons in Order
    No. of Cats Shipped Comm
    No. of Cartons Shipped DD
    DD Time (Hours)
    Manual Order
    No. Line Items in Order
    Electronic Order
    Payment Period (Months)

    Jan- Dec 03
    42,700,000
    35,000,000
    7,700,000
    2,320,000
    250,000
    2,000,000
    450,000
    200,000
    840,000
    1,600,000
    120,000
    80,000

    %
    122.0%
    100.0%
    22.0%
    6.6%
    0.7%
    5.7%
    1.3%
    0.6%
    2.4%
    4.6%
    0.3%
    -0.2%

    80,000
    75,000
    5,000

    Order 1

    Order 2

    Order 3

    Order 4

    610.0
    500.0
    110.0
    29.0
    25.0
    6.0
    3.5
    6.1
    40.4

    634.0
    500.0
    134.0
    29.0
    166.7
    25.0
    133.3
    7.9
    25.4
    - 253.2

    6,100.0
    5,000.0
    1,100.0
    290.0
    250.0
    60.0
    3.5
    61.0
    435.5

    6,340.0
    5,000.0
    1,340.0
    290.0
    166.7
    250.0
    133.3
    31.5
    253.6
    214.9

    6,100.0
    5,000.0
    1,100.0
    290.0
    250.0
    60.0
    31.5
    244.0
    224.5

    1
    1
    No
    1
    Yes
    1

    1
    1
    4
    Yes
    1
    No
    4

    10
    10
    No
    10
    Yes
    1

    10
    10
    4
    Yes
    10
    No
    4

    10
    10
    Yes
    10
    No
    4

    Personnel Expenses Per Carton = 2,320,000/80000 = 29


    Truck Driver Expenses Per Hour = 250000/1500/4 = 41.67
    Warehouse Expenses Per Carton = 2,000,000 / 80,000 = 25
    Freight Expenses Per Carton = 450,000 / 75,000 = 6
    Delivery Truck Expenses Per Hour = 200,000/1500/4 = 33.33
    Order Entry Expenses Electronic = 840,000*0.1/1500/16
    Order Entry Expenses Manual = 840,000*0.15/1500/16 + 840,000*0.075/1500/16 * No. of Line Items
    Interest Expenses = Sales * 1% * No. of Months
    Selling & General Expenses is not part of Order Based Costing.
    Key Issues & Solution to increase profitability:
    1. Rethink DD Option, at least for small orders.
    2. Payment required in 30 Days or charge interest.
    3. Use more of electronic system in order to reduce cost of operator entry.

    Page 1 of 1

    Order 5

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