1. Mr. Hilton stated that he thought merchandise 103 should be dropped. In reexamining the statement for the period of January 1. 2004 to June 30. 2004. this thought is non supported. Even though merchandise 103 continued to be unprofitable in 2004. Hilton Manufacturing Company did recognize a net income of $ 158. 000 for the first half of the twelvemonth by maintaining it in production. By maintaining merchandise 103 in production. Hilton Manufacturing Company was able to distribute out its fixed costs over three merchandises alternatively of merely two. Furthermore. dropping merchandise 103 or any of the merchandises for that affair would non hold needfully translated into increased gross revenues for the other two merchandises because the Hilton Manufacturing Company’s market portion remained consistent twelvemonth over twelvemonth.
2. Mr. Weston forecasted that if Hilton Manufacturing Company held its monetary value on merchandise 101 at $ 9. 41 per hundredweight. during the first six months of 2005. its unit gross revenues would be about 750. 000 hundredweight. Additionally. he felt that if the monetary value was dropped to $ 8. 64 per hundredweight. . the gross revenues volume would increase to 1. 000. 000 hundredweight. If all other disbursals were billed at the same rate with the exclusion of a 5 per centum addition in stuffs and supplies and a 7 per centum addition in light and heat. greater net incomes should hold been realized for merchandise 101 at a monetary value of $ 8. 64 than the company would hold seen for the merchandise at a monetary value of $ 9. 41 per hundredweight.
3. At first glimpse. it looks as though merchandise 101 is Hilton Manufacturing Company’s most profitable merchandise. But. in comparing the net net income borders for all three merchandises in 2003 and the first half of 2004 ( combined cyberspace net income borders: 101 = 2. 04 % . 102 = 5. 11 % . 103 = -12. 11 % ) . merchandise 102 appears to be the most profitable merchandise in the Hilton Manufacturing Company.
4. Product 102’s important addition in gross revenues and net net income border were two major lending factors to the company’s return to profitable operations in the period from January 1. 2004 to June 30. 2004. Not to be overlooked. Mr. Weston’s strong leading and his “wait and see” attitude towards doing alterations instantly after his reaching besides contributed to Hilton Manufacturing Company’s return to profitable operations in the first half of 2004.