All opportunity costs need not always be monetary example a man lost on an

All opportunity costs need not always be monetary

This preview shows page 38 - 43 out of 203 pages.

All opportunity costs need not always be monetary example a man lost on an island – whether he spends his time in climbing a tree for coconuts or 38
Image of page 38
TERRITORY AND PRODUCT LEVEL PROFITABILITY he spends time in fishing, can be examples of comparative evaluation of opportunities. Incremental costs are the extra cost that is incurred in the extra activity/ task/input. It differs from marginal cost in as much as marginal cost is the incremental cost incurred in producing one extra unit and hence unless expansion of capacity related extra costs are necessary, marginal cost in the short run is the variable cost of manufacturing/procurement. When we look at these costs, then we have to observe their behavior, as well as their nature, as mentioned above. Solution: Now let us see how to deal with the case Table no: 4.3 Profitability analysis inclusive of all expenses Rs. in lacs Darham Pharmaceuticals North Zone East Zone West Zone South Zone All India Products Sale s GM Sales GM Sales GM Sales GM Sales GM Dar cold tab 120 54 90 40.5 150 67.5 105 47.25 465 209.25 Dar cold syrup 180 90 180 90 360 180 270 135 990 495 Dar met tab 960 336 1200 420 1440 504 720 252 4320 1512 Dar met syrup 1500 630 1800 756 2100 882 1200 504 6600 2772 Dar clox 250 450 99 540 118.8 720 158.4 360 79.2 2070 455.4 Dar clox 500 660 151.8 1320 303.6 660 151.8 330 75.9 2970 683.1 3870 1360.8 5130 1728.9 5430 1943.7 2985 1093.35 17415 6126.75 39
Image of page 39
TERRITORY AND PRODUCT LEVEL PROFITABILITY Gm as apercent ge of sales 0.35 0.34 0.36 0.37 0.35 Ranking 3rd 4th 2nd 1st Gross margins 1360.8 1728.9 1943.7 1093.35 6126.75 Salary VP (M/ S) 50 percent 5 6.6 7 3.9 22.5 GM (S) 7.1 9.4 10 5.5 32 RSM 20 20 20 20 80 BMs 20 20 30 20 90 Sales Supervis or 60 8 nos 52.5 7 nos 82.5 11 nos 75 10 nos 270 36 nos Salesme n 200 40 nos 140 28 nos 275 55 nos 225 45 nos 840 168 nos 0.08 312.1 0.048 248.6 0.078 424.5 0.117 349.3 0.077 1334.5 Travellin g VP (M/ S) 50 percent 2.2 3 3.1 1.7 10 GM (S) 6.7 8.8 9.4 5.1 30 RSM/BM 39 40 43 39 161 Sales Supervis or 32 8 nos 26.25 7 nos 49.5 11 nos 35 10 nos 142.75 36 nos Salesme n 104 40 nos 65.52 28 nos 157.3 55 nos 93.6 45 nos 420.42 168 nos 0.05 183.9 0.03 143.6 0.05 262.3 0.06 174.5 0.04 764.2 Commis sion On OTC @ 3 percent 9 8.1 15.3 11.25 43.65 40
Image of page 40
TERRITORY AND PRODUCT LEVEL PROFITABILITY On Eth @ 2 percent 71.4 97.2 98.4 52.2 319.2 0.021 80.4 0.021 105.3 0.021 113.7 0.021 63.45 0.021 362.85 Off Admin 0.01 50 0.01 42 0.01 64 0.01 38 0.01 194 Commu ni- cation 0.01 26 0.01 27 0.01 28 0.00 14 0.01 95 Sales Promotio n 0.00 10 0.00 7 0.00 15 0.00 6 0.00 38 C and FA 0.02 65 0.01 56 0.01 72 0.01 35 0.01 228 Sec frt 0.01 35 0.01 48 0.01 53 0.01 29 0.01 165 Corp allctd 0.03 133.3 0.03 176.7 0.03 187.1 0.03 102.8 0.03 600 Total S and D expns 895.7 854.2 1219.5 812.1 3781.5 Net mergins 0.12 465.1 0.17 847.7 0.13 724.2 0.09 281.3 0.13 2345.2 Ranking 3rd 1st 2nd 4th Earlier Ranking 3rd 4th 2nd 1st Stock 75 days 516 80 days 745 90 days 860 55 days 285 78 days 2406 Receivab les 17 days 180 18 days 253 26 days 387 16 days 131 20 days 951 Investm ents 696 998 1246 416 3357 ROI 0.67 0.88 0.58 0.68 0.70 Ranking 3rd 1st 4th 2nd Sales 3870 5130 5430 2985 17415 41
Image of page 41
TERRITORY AND PRODUCT LEVEL PROFITABILITY In the above table we have plotted the total sales, total gross margins, and thereafter the several expenses, to arrive at the net margin figures zone wise. On the basis of what has been mentioned earlier regarding the behavior pattern of costs, you will observe that there are several heads of costs which have been allocated to the zones. When I say allocated it means that the costs were not incurred by the centers on their own, but were incurred else where, and apportioned to the centers. For instance a General Manager Sales who is operating from a Head Office level, visits branches and incurs expenses on his traveling. Is this amount controllable by the branch or zone incharge? You will observe it is not so. Where as, for a
Image of page 42
Image of page 43

You've reached the end of your free preview.

Want to read all 203 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors