| Sharon Pipe, Inc. |
| Exhibit 1 |
| Annual Sales | Probability |
| 1,000 | 0.10 | 1300 |
| 1,200 | 0.60 |
| 1,600 | 0.30 |
| Exhibit 2 | | | | Incremental? |
| 1. Raw materials | $384,000 | $384,000.00 | | Yes |
| 2. Distribution cost | 24,000 | 24000 | | No |
| 3. Direct labor | 40,000 | 40,000 | | Yes |
| 4. Indirect labor | 8,000 | 8000 | | No |
| 5. Pension and welfare | 6,720 | 6720 | | Yes, only direct labor component |
| 6. Payroll taxes | 4,800 | 4800 | | Yes, only direct labor component |
| 7. Utilities | 8,000 | 8,000 | $0.0067 | Yes |
| 8. Repairs and maintenance | 7,000 | 7,000 | | Yes |
| 9. Floor space | 6,600 | 6,600 | | No, allocated costs |
| 10. General factory | 18,000 | 18,000 | | No, allocated costs |
| 11. Depreciation | 75,000 | 75000 | | Yes |
| 12. Lost interest | 78,000 | 78000 | | Yes |
| | $660,120 |
| Based on production of | 1,200,000 | pounds / year |
| 1. Raw materials | $0.32 | per pound |
| 2. Distribution cost | $0.02 | per pound |
| 3. Direct labor | $40,000 | per year after the 3rd year |
| | $40,000 | per year during first 3 years w/ 20% probability |
| 4. Indirect labor | 20% | of item 3 |
| 5. Pension and welfare | 14% | of items 3 plus 4 |
| 6. Payroll taxes | 10% | of items 3 plus 5 |
| 7. Utilities | $0.0067 | per pound |
| 8. Repairs and maintenance | $7,000 | fixed |
| 9. Floor space | $6,600 | fixed |
| 10. General factory | $18,000 | fixed |
| 11. Depreciation | $75,000 | based on cost of equipment depreciated 8 years |
| 12. Lost interest | $78,000 | lost interest on the $600,000 used to purchase the equipment |
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SharonPipeInc.template.xlsx
