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FINC 527 Project Notes Moataz

FINC 527 Project Notes Moataz

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Published by Islam Issa
I found a site describing the cost structure of one carton of Marlboro cigarettes in Canadian dollars in 2002: (http://wiki.answers.com/Q/What_is_the_true_cost_of_manufacturing_a_carton_of_Marlboro_cigarettes.#page3)
The wholesale price is $53.01 out of which $42.89 is taxes. The exchange rate at that time (2002) was $1 Canadian = $0.63 US.
Total manufacturing costs (before taxes and operating profit) is $5.7/carton.
Materials comprise the larger proportion of the cost, while labor is relatively small indicating the automation nature of cigarette manufacturing.
Tobacco leafs is the largest single cost input with $1.15/carton or more than 20% of the cost.
Handling, transport and storage of tobacco leafs at the early stage constitute 17% of total costs.
Production process (tobacco processing, plug making and cigarette making) comprise 19% of total costs.
Packaging and shipping constitute 14% of the total.
General business expense (including building depreciation and overhead) constitute the remaining 30%.
Operating profits is estimated at $4.43/carton.
Component Value Percentage
Wholesale price $53.01
Taxes $42.89
Price charged by manufacturers $10.13
Operating Profits $4.43
Total manufacturing cost $5.7 100% of cost
Material - Tobacco leaf $1.15 20% of cost
Handling, transport & storage ~17% of cost
Production process ~19% of cost
Packaging & shipping ~15% of cost
General business expense 30% of cost



I found a site describing the cost structure of one carton of Marlboro cigarettes in Canadian dollars in 2002: (http://wiki.answers.com/Q/What_is_the_true_cost_of_manufacturing_a_carton_of_Marlboro_cigarettes.#page3)
The wholesale price is $53.01 out of which $42.89 is taxes. The exchange rate at that time (2002) was $1 Canadian = $0.63 US.
Total manufacturing costs (before taxes and operating profit) is $5.7/carton.
Materials comprise the larger proportion of the cost, while labor is relatively small indicating the automation nature of cigarette manufacturing.
Tobacco leafs is the largest single cost input with $1.15/carton or more than 20% of the cost.
Handling, transport and storage of tobacco leafs at the early stage constitute 17% of total costs.
Production process (tobacco processing, plug making and cigarette making) comprise 19% of total costs.
Packaging and shipping constitute 14% of the total.
General business expense (including building depreciation and overhead) constitute the remaining 30%.
Operating profits is estimated at $4.43/carton.
Component Value Percentage
Wholesale price $53.01
Taxes $42.89
Price charged by manufacturers $10.13
Operating Profits $4.43
Total manufacturing cost $5.7 100% of cost
Material - Tobacco leaf $1.15 20% of cost
Handling, transport & storage ~17% of cost
Production process ~19% of cost
Packaging & shipping ~15% of cost
General business expense 30% of cost



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Published by: Islam Issa on Apr 27, 2013
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