Direct labor increased 08 as a percentage of revenue

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Direct labor increased 0.8% as a percentage of revenue in TTM 16, driven by increased overtime costs discussed further in this section of the report. Variable non-labor includes maintenance, supplies, small tools and tooling and increased consistent with revenues. The Company's methodology for calculating product warranties changed in Fiscal 14, causing a $1,440 decrease in this expense which has been adjusted in MA-11 in the Quality of Earnings section of the report. Logistics includes standard and expedited freight costs, which are typically marked-up and billed to customers. Variable selling costs represent independent sales representative commissions discussed previously in the report. Fixed manufacturing overhead costs increased by $1,698 in TTM 16, but decreased 1.8% as a percentage of revenues. Insights While total variable costs as a percentage of revenues remained relatively consistent over the Historical Period, total fixed costs as a percentage of revenues decreased 1.5% in TTM 16. This is driven by increasing revenue volumes leveraging relatively fixed manufacturing costs. Cost of goods sold summary $ in thousands Fiscal 14 Fiscal 15 TTM16 Fiscal 14 Fiscal 15 TTM16 Variable costs % of revenue Material 75,584 75,225 92,457 37.1% 36.1% 35.9% Labor 31,412 31,719 41,057 15.4% 15.2% 16.0% Non-labor 6,777 6,702 7,973 3.3% 3.2% 3.1% Product warranty 4,489 5,650 6,655 2.2% 2.7% 2.6% Logistics 9,469 10,353 12,215 4.7% 5.0% 4.7% Variable Selling 17,217 18,892 22,613 8.5% 9.1% 8.8% Total variable manufacturing costs 144,947 148,542 182,970 71.2% 71.4% 71.1% Fixed costs Fixed Manufacturing Overhead 25,148 26,162 27,860 12.4% 12.6% 10.8% Manufacturing Leadership Bonus 243 107 435 0.1% 0.1% 0.2% Manufacturing Profit Sharing 255 440 794 0.1% 0.2% 0.3% Total fixed manufacturing costs 25,646 26,709 29,089 12.6% 12.8% 11.3% Total 170,594 175,250 212,060 83.8% 84.2% 82.4%
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© 2016 Grant Thornton LLP | Project Lightning | October 21, 2016 DRAFT 49 Aluminum price fluctuations do not significantly impact gross margins as the Company utilizes a cost plus pricing model Income statement analysis 20% 25% 30% 35% 40% 45% 50% 0 500 1,000 1,500 2,000 2,500 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 DM as a % of rev Alumimum price/ton (actual) Aluminum commodity price DM as a % of revenues Direct material detail $ in thousands Fiscal 14 Fiscal 15 TTM16 Fiscal 14 Fiscal 15 TTM16 % of revenue Direct material at standard cost 80,744 83,903 97,020 39.7% 40.3% 37.7% Purchase price variance (4,068) (3,407) (6,296) -2.0% -1.6% -2.4% Scrap (10,670) (11,521) (11,111) -5.2% -5.5% -4.3% Other 145 279 429 0.1% 0.1% 0.2% Direct material at actual cost 66,151 69,253 80,043 32.5% 33.3% 31.1% Subcontract 4,685 902 6,494 2.3% 0.4% 2.5% Crating material 2,351 2,473 2,797 1.2% 1.2% 1.1% Freight 1,592 1,844 2,038 0.8% 0.9% 0.8% Dies 803 734 958 0.4% 0.4% 0.4% Bond - 19 128 0.0% 0.0% 0.0% Total direct material costs 75,584 75,225 92,457 37.1% 36.1% 35.9% Observations Direct materials at standard costs represents aluminum, glass, fasteners and other materials at standard costs set by the Company. Standard costs for aluminum are reviewed annually in March. As aluminum pricing has declined overall through the Historical Period, standard costs per pound of aluminum used by the Company decreased from $1.20 to $0.96 in Mar-16.
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  • Spring '08
  • McCaffrey
  • Revenue, Grant Thornton LLP

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