TABLE 1

SEVEN FLAGS MANUFACTURING

Sales Information
Large Medium Small Total

Towel:             Regular 27,250 16,600 10,550 54,400

                        Mid-Size 36,640 18,552 10,308 65,500
                        Hand 35,880 19,966 95,954 151,800
                        Special 480 3,426 594 4,500

Number of Units Sold 100,250 58,544 117,406 276,200

Number of Units Sold excluding special 99,770 55,118 116,812 271,700
Number of Units Embroidered 5,959 6,490 29,394 41,842
Number of Units Dyed 20,536 9,935 12,328 42,798
Sales Volume Revenue $308,762 $183,744 $318,024 $810,530
Number of Orders Received 133 845 5,130 6,108
Number of Shipments Made 125 923 5,453 6,501
Number of Invoices Sent 112 754 4,737 5,603
Number of Customers 8 154 824 986
Accounts with Balance >60 Days 1 11 122 134
 98,100 59,760 37,980
117,248 59,366 32,986
91,494 50,913 244,683
1,920 13,704 2,376
 TABLE 2
SEVEN FLAGS MANUFACTURING
Unit Cost Information

Line 1 Direct Manufacturing Costs Per Unit

Sales
Quantity Material Labor
Price

Towels:           Regular 54,400 3.60 0.60 0.37

                        Mid-Size 65,500 3.20 0.50 0.33
                        Hand 151,800 2.55 0.39 0.31
                        Special 4,500 4.00 0.67 0.48

Line 2 Direct Costs of Customizing Per Unit

Quantity Cost Material Labor

Inking (based on passes) 552,400 — $0.00 $0.00

Dyeing 42,798 $0.11 — —
Embroidery 41,842 — 0.0026 0.175

Direct Labor Wage Rate: $9.00 (Including Fringes)

Inking requires one pass for each color used; average two colors per towel (i.e., 2 per unit), and is used on all towels.
 Overhead Unit Cost

0.22 1.19
0.20 1.03
0.19 0.89
0.29 1.44

Overhead Total

$0.07 $0.08 45,131

0 0.11 4,708
1.0994 1.277 53,432

and is used on all towels.

 TABLE 3
SEVEN FLAGS MANUFACTURING
Selling and Administrative Costs and Activities

Costs Incurred in Each Function (Shipping, Sales, Marketing)

Directly Assigned To:

Total Shipping Sales Marketing Other Total Assigned Unassigned

Administration 170,000 17,000 37,400 20,400 56,100 130,900 39,100

Selling 155,000 15,500 117,800 9,300 12,400 155,000
325,000 32,500 155,200 29,700 68,500 285,900 39,100

Each function is used for the Following Activities Percentage

Selling and Administrative Activities: Shipping Sales Marketing Other
Entering Purchase Orders 55% 10%
Commissions 10%
Shipping Activities 65% 15%
Invoicing 20%
Cost to Make Sales Calls 30% 10%
Checking Credit 10%
Samples, Catalog Info. 5% 10%
Special Handling Charges 5% 5%
Distribution Management 10% 10%
Marketing, by Customer Type 5%
Advertising/Promotion 30%
Marketing 15% 50% 5%
Administrative Office Support 20%
Licenses, Fees 5%
100% 100% 100% 100%
* Note that $39,100 of the SG&A cost was not directly assigned. This amount represents the facility-sustaining activity cost.
ustaining activity cost.
Selling and Administrative Activities: Shipping Sales Marketing Other Total
Entering Purchase Orders - 85,360 - 6,850 92,210
Commissions - 15,520 - - 15,520
Shipping Activities 21,125 - - 10,275 31,400
Invoicing - - - 13,700 13,700
Cost to Make Sales Calls - 46,560 - 6,850 53,410
Checking Credit - - - 6,850 6,850
Samples, Catalog Info. 1,625 - 2,970 - 4,595
Special Handling Charges 1,625 - - 3,425 5,050
Distribution Management 3,250 - 2,970 - 6,220
Marketing, by Customer Type - 7,760 - - 7,760
Advertising/Promotion - - 8,910 - 8,910
Marketing 4,875 - 14,850 3,425 23,150
Administrative Office Support - - - 13,700 13,700
Licenses, Fees - - - 3,425 3,425
Unassigned - facility sustaining cost - - - - 39,100
32,500 155,200 29,700 68,500 325,000
 Activity Cost Cost Driver Qty. for Activity Cost for Product Line Production Activity Cost per unit of
Activity
pools
Cost Drivers Cost Driver Qty. Pool Rate Product Line
Product Line Product Line Volume Product Overheads allocation

Entering Purchase Orders 92,210 Number of Orders 6,108 15.10 Large 133 2,008 100,250 0.020 Large Medium Small
Medium 845 12,757 58,544 0.218 Entering Purchase Orders 0.02 0.22 0.66
Small 5,130 77,446 117,406 0.660 Commissions - 0.27 -
Commissions 15,520 Sales Dollars with Medium Customers 183,744 0.08 Large - - 100,250 0.000 Shipping Activities 0.01 0.08 0.22
Medium 183,744 15,520 58,544 0.265 Invoicing 0.00 0.03 0.10
Small - - 117,406 0.000 Cost to Make Sales Calls 0.53 - -
Shipping Activities 31,400 Number of Shipments 6,501 4.83 Large 125 604 100,250 0.006 Checking Credit 0.00 0.01 0.05
Medium 923 4,458 58,544 0.076 Samples, Catalog Info. 0.02 0.02 0.02
Small 5,453 26,338 117,406 0.224 Special Handling Charges - 0.02 0.03
Invoicing 13,700 Number of Invoices 5,603 2.45 Large 112 274 100,250 0.003 Distribution Management 0.02 0.02 0.02
Medium 754 1,844 58,544 0.031 Marketing, by Customer Type 0.03 0.03 0.03
Small 4,737 11,583 117,406 0.099 Advertising/Promotion - 0.04 0.06
Cost to Make Sales Calls 53,410 Sales Dollars with Large Customers 308,762 0.17 Large 308,762 53,410 100,250 0.533 Marketing 0.09 0.09 0.09
Medium - - 58,544 0.000 Administrative Office Support 0.05 0.05 0.05
Small - - 117,406 0.000 Licenses, Fees - 0.06 -
Checking Credit 6,850 Percent Accounts >60 Days 134 51.12 Large 1 51 100,250 0.001 Unassigned - facility sustaining cost 0.14 0.14 0.14
Medium 11 562 58,544 0.010 0.91 1.07 1.47
Small 122 6,237 117,406 0.053
Samples, Catalog Info. 4,595 Sales Dollars 810,530 0.01 Large 308,762 1,750 100,250 0.017
Medium 183,744 1,042 58,544 0.018
Small 318,024 1,803 117,406 0.015
Special Handling Charges 5,050 Management Estimate1 100% 5050 Large 0% - 100,250 0.000
Medium 20% 1,010 58,544 0.017
Small 80% 4,040 117,406 0.034
Distribution Management 6,220 Sales Dollars 810,530 0.01 Large 308,762 2,369 100,250 0.024
Medium 183,744 1,410 58,544 0.024
Small 318,024 2,441 117,406 0.021
Marketing, by Customer Type 7,760 Sales Dollars 810,530 0.01 Large 308,762 2,956 100,250 0.029
Medium 183,744 1,759 58,544 0.030
Small 318,024 3,045 117,406 0.026
Advertising/Promotion 8,910 Management Estimate2 100% 8910.00 Large 0% - 100,250 0.000
Medium 25% 2,228 58,544 0.038
Small 75% 6,683 117,406 0.057
Marketing 23,150 Number of Units Sold3 271,700 0.09 Large 100,250 8,542 99,770 0.086
Medium 58,544 4,988 55,118 0.091
Small 117,406 10,003 116,812 0.086
Administrative Office Support 13,700 Number of Units Sold4 271,700 0.05 Large 100,250 5,055 99,770 0.051
Medium 58,544 2,952 55,118 0.054
Small 117,406 5,920 116,812 0.051
Licenses, Fees 3,425 Sales Dollars with Medium Customers 183,744 0.02 Large - - 100,250 0.000
Medium 183,744 3,425 58,544 0.059
Small - - 117,406 0.000
Unassigned - facility sustaining cost 39,100 Number of Units 276,200 0.14 Large 100,250 14,192 100,250 0.142
Medium 58,544 8,288 58,544 0.142
Small 117,406 16,620 117,406 0.142

1
20% to medium-sized customers; 80% to small-sized customers.
2
25% to medium-sized customers; 75% to small-sized customers.
3
Excluding Specials
4
Excluding Specials
 Large Medium Small Total
Sales Volume Revenue 308,762 183,744 318,024 810,530
Direct Manufacturing Costs 102,791 61,566 109,426 273,783
Inking costs 16,381 9,566 19,184 45,131
Dyeing costs 2,259 1,093 1,356 4,708
Embroidery costs 7,610 8,288 37,536 53,434
Overheads allocation 91,276 62,735 172,238 326,250
Total costs 220,317 143,248 339,741 703,306
Margins 88,445 40,496 (21,717) 107,224
Margin % 29% 22% -7% 13%