# Case Hilton Manufacturing

Topics: Expense, Depreciation Pages: 2 (276 words) Published: December 3, 2014
John Knotwell
ACCT 6350
10/10/2014

Case ­ Hilton Manufacturing

1) If the company had dropped product 103 as of January 1, 2004, what effect  would that action have had on the \$158,000 profit for the first six months of  2004?
The impact on the profit would have been to decrease the profit by about \$2.5M.  This  would mean that this would now trend to an unprofitable move.  It was wise NOT to  divest the product in the first half.

2) In January 2005, should the company reduce the price of product 101 from \$9.41  to \$8.64?
Simple answer is maybe.  The increase in units from 750,000 to 1,000,000 would  show an increase in net income and would be a higher profit, but selling 33% more  product is a risky move in general.  Who’s to say that the competition won’t just follow  suit?

750,000 Units
1,000,000 Units
Sales

7,057,500.00

Less Variable Exp.

9.41

8,640,000.00

8.64

Direct Labor

1,747,500

2.33

1,747,500

2.33

Power

30,000

0.04

30,000

0.04

Light/Heat

22,250

0.03

22,250

0.03

Materials

1,087,500

1.45

1,087,500

1.45

Supplies

75,000

0.10

75,000

0.10

Repairs

30,000

0.04

30,000

0.04

Compensation
Insurance

127,500

0.17

127,500

0.17

Total Variable
Expense

3,119,750

4.16

3,119,750

4.16

Contribution
Margin

3,937,500

5.25

4,484,182.00

4.48

Less Fixed Expenses

Selling Expense

1,635,000.00

1,639,700.00

1.6397

General

619,000.00

620,900.00

0.6209

Depreciation

1,014,000.00

1,017,200.00

1.0172

Interest

94,000.00

94,100.00

0.0941

Total Fixed
Expenses

3,362,000.00

3,371,900.00

Net Income

578,636.50

1,112,282.00

3) What is HIlton’s most profitable product? ...