Anchor Glass Container Corporation, the third largest manufacturer of glass containers in the U.S., supplies beverage and food producers and consumer products manufacturers nationwide. Parent company Consumers Packaging Inc. (Toronto Stock Exchange: CGC) is a leading international designer and manufacturer of glass containers.

The following management discussion appeared in a recent annual report of Anchor Glass.

ANCHOR GLASS CONTAINER CORPORATION

Management Discussion

Cost of Products Sold Cost of products sold as a percentage of net sales was 89.3% in the current year compared to 87.6% in the prior year. The increase in cost of products sold as a percentage of net sales principally reflected the impact of operational problems during the second quarter of the current year at a major furnace at one of the Company’s plants, higher downtime, and costs and expenses associated with an increased number of scheduled capital improvement projects, increases in labor, and certain other manufacturing costs (with no corresponding selling price increases in the current year). Reduced fixed costs from the closing of the Streator, Illinois, plant in June of the current year and productivity and efficiency gains partially offset these cost increases.

Instructions

What factors affect the costs of products sold at Anchor Glass Container Corporation?