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