Refer to the HR Reports in the Inquirer. Through past investments in recruiting and training Digby has
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Refer to the HR Reports in the Inquirer. Through past investments in recruiting and training Digby has obtained a productivity index of 109.6%. This means that Digby's labor costs would be increased by 9.6% if it did not have these productivity improvements. This is a competitive advantage that Digby can sustain or even widen further if its competitors have no HR initiatives. Now, refer to the Income Statement in Digby's Annual Report. How much did Digby's productivity improvements save it in direct labor costs (in thousands) last year?
$766
$29818
$3137
$3211
Transcribed Image Text:
Annual Report Round: 0 Dec. 31, 2016 Digby C59559 2016 Income Statement 2016 Common (Product Name:) Dot Dune Daze Deft Na Na Na Na Total Size Sales $25,485 $31,829 $34,848 $39,697 $0 $0 SO $131,859 100.0% Variable Costs: Direct Labor Direct Material Inventory Carry Total Variable $5,423 $9,398 $32,680 $53,440 $7,109 $9,513 $10,636 $0 $0 SO 24.8% $12,538 $14,476 $17,028 $0 $0 so 40.5% $309 $394 $325 $189 $0 so so $1,217 0.9% $15,131 $20,041 $24,313 $27,852 $0 $0 so $87,337 66.2% Contribution Margin $10,354 $11,788 $10,535 $11,845 $0 $0 $0 SO $44,521 33.8% Period Costs: Depreciation SG&A: R&D $2,660 $3,167 $1,800 $1,900 $0 $0 so so $9,527 7.2% $958 $979 $936 s896 $0 $0 so SO $3,768 2.9% $1,050 $1,000 $1,050 $0 $4,200 $3,000 $1,689 Promotions $1,050 $1,050 $0 so SO 3.2% Sales 008$ S600 $600 $0 $0 $0 so 2.3% Admin $326 $408 $446 $508 $0 so SO 1.3% Total Period $5,994 $6,403 $4,832 $4,955 $0 $0 SO $22,184 16.8% Net Margin $4,360 $5,385 $5,703 $6,890 $0 $0 so SO $22,337 16.9% Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D department expenditures for each product. Admin: Administration overhead is estimated at 1.5% Short Term Interest of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for LongTerm Interest each product. Other: Charges not included in other categories such as Fees, Write Offs, and TOM. The fees include money paid to investment bankers and brokerage firms to issue new stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you Net Profit might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit sharing. Other $479 0.4% EBIT $21,859 16.6% $3,249 2.5% $6,728 5.1% $4,158 $154 Тахes 3.2% Profit Sharing 0.1% $7,568 5.7% Variable Margins 2008 Digby 40.0% 30.0% 20.0% 10.0% 0.0% Annual Report Round: 0 Dec. 31, 2016 Digby C59559 2016 Income Statement 2016 Common (Product Name:) Dot Dune Daze Deft Na Na Na Na Total Size Sales $25,485 $31,829 $34,848 $39,697 $0 $0 SO $131,859 100.0% Variable Costs: Direct Labor Direct Material Inventory Carry Total Variable $5,423 $9,398 $32,680 $53,440 $7,109 $9,513 $10,636 $0 $0 SO 24.8% $12,538 $14,476 $17,028 $0 $0 so 40.5% $309 $394 $325 $189 $0 so so $1,217 0.9% $15,131 $20,041 $24,313 $27,852 $0 $0 so $87,337 66.2% Contribution Margin $10,354 $11,788 $10,535 $11,845 $0 $0 $0 SO $44,521 33.8% Period Costs: Depreciation SG&A: R&D $2,660 $3,167 $1,800 $1,900 $0 $0 so so $9,527 7.2% $958 $979 $936 s896 $0 $0 so SO $3,768 2.9% $1,050 $1,000 $1,050 $0 $4,200 $3,000 $1,689 Promotions $1,050 $1,050 $0 so SO 3.2% Sales 008$ S600 $600 $0 $0 $0 so 2.3% Admin $326 $408 $446 $508 $0 so SO 1.3% Total Period $5,994 $6,403 $4,832 $4,955 $0 $0 SO $22,184 16.8% Net Margin $4,360 $5,385 $5,703 $6,890 $0 $0 so SO $22,337 16.9% Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D department expenditures for each product. Admin: Administration overhead is estimated at 1.5% Short Term Interest of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for LongTerm Interest each product. Other: Charges not included in other categories such as Fees, Write Offs, and TOM. The fees include money paid to investment bankers and brokerage firms to issue new stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you Net Profit might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit sharing. Other $479 0.4% EBIT $21,859 16.6% $3,249 2.5% $6,728 5.1% $4,158 $154 Тахes 3.2% Profit Sharing 0.1% $7,568 5.7% Variable Margins 2008 Digby 40.0% 30.0% 20.0% 10.0% 0.0%
Expert Answer:
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ANSWER C 3137 Direct labor costs are the wages or salaries paid to employees who physically produce ... View the full answer
Related Book For
Human Resource Management
ISBN: 978-1305500709
15th edition
Authors: Robert Mathis, John Jackson, Sean Valentine, Patricia Meglich
Posted Date:
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