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Analysis of Selling Price and Unit Cost for Profitability

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Cost-volume-profit analysis as a tool used for decision making.

The Hershey Corporation:
http://library.corporate-ir.net/library/11/115/115590/items/283950/10K_Hershey[1].pdf

Review the Consolidated Statements of Income In Hershey's 2007 annual report (ignore all figures below net income, such as, per share information). Using the spreadsheet below fill in requirements 1 through 4 in the spreadsheet using the following data:

1. Units Sold

a. 2005 - 100,000,000 units

b. 2006 - 100,400,000 units

c. 2007 - 200,000,000 units

2. Variable Manufacturing Costs Percentage- 45% of Cost of Sales

3. Variable Marketing Costs Percentage- 15% of Cost of Sales

4. Fixed Costs Percentage- 40% of Cost of Sales

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Solution Summary

The blue amounts are from the Hershey financial statements. The other amounts are calculated (click on cells) or point to the blue amounts so you can see how I responded to the requirements.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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