Page 110 - RISK Management IC86 Ebook

Risk Management

(V.C. = variable cost) (F.F.C. = Factory fixed cost)
N.B. Gross profit is defined above in accounting sense - it is
used quite differently in consequential loss insurance

f) Tabulate for each product group
l sales
l gross profit
l net contribution (all non-variable costs)

g) Using schematic block diagram allocate sales, gross profit
(G.P.) and net contribution (N.C.) to each processing block.
l starting from final production stage and working
backwards
l note that there is an exposure of G.P. and N.C. at each
stage. Show final dependence without brackets and any
previous dependence with brackets

h) Tabulate values exposed and breakdown with relevant data.
For each block there may be several streams of potential G.P.
and N.C, List each product group separately under each block
using brackets as in 7 and add a note to show source and
destination of product group.
i) Produce simplified flow chart of each block. This should
show

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