Copyright 2010 President and Fellows of Harvard College. No part of this product may be
reproduced, stored in a retrieval system or transmitted in any form or by any meanselectronic,
mechanical, photocopying, recording or otherwisewithout the permission of Harvard Business
School.
Exhibit 1 Price trend of color separations to scan, assemble, proof and output
printer specified film for a hypothetical direct mail catalog page with one image
1991
1992
1993
1994
1995
Colorscope
1,100
900
750
650
600
400
425
450
475
500
Service-Bureau
2 Service -Bureaus such as Kinko's and Alphagraphics typically do jobs that are cheaper, and
involve fewer and/or smaller pages.
Design (3 weeks),
writing copy,
producing layouts,
gaining
management
approvals.
Photography (2
weeks), 200300 images,
studio and
location shots.
Prepress (2
weeks), 2
rounds of
proofs to
the project
manager.
Printing (3 days),
cutting, binding,
addressing for
national distribution
$10,000
$50,000
$30,000
$1,300,000
$120,000
Exhibit 5 Top American Pre-press Competitors (does not include printers that have integrated forward)
Company
WACE USA
Applied Graphics Technologies
Black Dot Group
Schawk, Inc.
Sales Employees
(M$US)
200
130
109
104
1,850
1,060
900
729
American Color
76
840
Intaglio Vivi-Color
Enteron Group
60
56
450
400
Kwik International
Color Associates
TSI Graphics
Blanks Color Imaging
Kreber Graphics, Inc.
41
37
27
24
22
110
390
313
230
165
packaging, agency
packaging, publishing, catalogs
mags, dir. mail, packaging, books
mags, dir. mail, packaging, agency
mags, dir. mail, pkg, agncy, retail
Customer # Pages
10
16
10
16
10
32
11
16
11
16
12
16
12
32
12
32
12
32
13
128
14
16
14
16
14
16
14
16
14
16
15
16
15
16
16
32
16
4
16
4
17
16
17
16
18
4
19
4
19
16
20
1
545
Revenue
$9,600
9,600
23,000
12,000
11,000
11,000
23,000
22,000
20,000
50,000
7,800
8,000
8,000
9,000
9,800
11,000
11,000
20,000
2,000
1,400
8,000
10,000
4,000
2,000
12,000
0
$315,200
$ 600.00
$ 600.00
$ 718.75
$ 750.00
$ 687.50
$ 687.50
$ 718.75
$ 687.50
$ 625.00
$ 390.63
$ 487.50
$ 500.00
$ 500.00
$ 562.50
$ 612.50
$ 687.50
$ 687.50
$ 625.00
$ 500.00
$ 350.00
$ 500.00
$ 625.00
$ 1,000.00
$ 500.00
$ 750.00
$
$ 578.35
23,400
40
585
JOB#
Job
Preparation
61001
61002
61003
61101
61102
61201
61202
61203
61204
61301
61401
61402
61403
61404
61405
61501
61502
61601
61602
61603
61701
61702
61801
61901
61902
62001
Idle Time
Capacity
4
3
7
4
4
4
7
6
6
15
5
4
4
4
4
4
4
7
2
2
4
4
1
2
5
1
117
43
Applied
Cost
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
160
$
1000 $
295.29
221.47
516.75
295.29
295.29
295.29
516.75
442.93
442.93
1,107.33
369.11
295.29
295.29
295.29
295.29
295.29
295.29
516.75
147.64
147.64
295.29
295.29
73.82
147.64
369.11
73.82
8,637.14
2,150.00
8,000.00
50.00
Scanning
32
24
40
16
16
16
32
34
30
130
14
19
20
22
20
21
20
26
5
5
20
20
5
5
19
1
612
28
640
1000
Applied Cost
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,212.30
2,409.22
4,015.37
1,606.15
1,606.15
1,606.15
3,212.30
3,413.06
3,011.53
13,049.95
1,405.38
1,907.30
2,007.68
2,208.45
2,007.68
2,108.07
2,007.68
2,609.99
501.92
501.92
2,007.68
2,007.68
501.92
501.92
1,907.30
100.38
30,600.00
1,400.00
32,000.00
50.00
Hours clocked in different work stations include rework hours given in Exhibit 10.
* All figures are disguised
Assembly
42
38
75
30
28
32
58
64
58
250
32
32
34
36
36
39
40
60
10
11
39
41
11
12
42
2
1152
128
1280
4000
Applied Cost
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,034.89
2,745.85
5,419.44
2,167.78
2,023.26
2,312.30
4,191.03
4,624.59
4,191.03
18,064.81
2,312.30
2,312.30
2,456.81
2,601.33
2,601.33
2,818.11
2,890.37
4,335.55
722.59
794.85
2,818.11
2,962.63
794.85
867.11
3,034.89
144.52
57,600.00
6,400.00
64,000.00
50.00
Output
8
8
16
4
4
4
8
8
8
32
4
8
4
4
4
4
8
8
1
2
4
4
2
1
4
1
163
37
200
2000
Applied Cost
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,185.57
1,185.57
2,371.15
592.79
592.79
592.79
1,185.57
1,185.57
1,185.57
4,742.30
592.79
1,185.57
592.79
592.79
592.79
592.79
1,185.57
1,185.57
148.20
296.39
592.79
592.79
296.39
148.20
592.79
148.20
8,150.00
1,850.00
10,000.00
50.00
Quality
Control
7
8
8
4
4
6
5
6
8
30
4
7
3
5
4
4
7
9
1
1
3
5
1
1
5
1
147
13
160
500
Applied Cost
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Total
604.25
93
690.57
81
690.57
146
345.29
58
345.29
56
517.93
62
431.61
110
517.93
118
690.57
110
2,589.65
457
345.29
59
604.25
70
258.97
65
431.61
71
345.29
68
345.29
72
604.25
79
776.90
110
86.32
19
86.32
21
258.97
70
431.61
74
86.32
20
86.32
21
431.61
75
86.32
6
10,106.25
2191
893.75
249
$ 11,000.00 2440
68.75
Cost +
Material
Selling Price
$ 16,432.30 $
9,600.00
$ 11,852.68 $
9,600.00
$ 17,513.28 $
23,000.00
$
6,807.28 $
12,000.00
$
6,362.77 $
11,000.00
$
6,824.45 $
11,000.00
$ 12,837.26 $
23,000.00
$ 13,584.09 $
22,000.00
$ 12,721.64 $
20,000.00
$ 53,554.03 $
50,000.00
$
6,824.86 $
7,800.00
$
9,404.71 $
8,000.00
$
9,511.54 $
8,000.00
$
8,229.47 $
9,000.00
$
7,842.38 $
9,800.00
$
8,359.54 $
11,000.00
$ 12,083.17 $
11,000.00
$ 12,724.76 $
20,000.00
$
2,206.68 $
2,000.00
$
2,827.13 $
1,400.00
$
8,072.83 $
8,000.00
$
8,789.99 $
10,000.00
$
4,353.31 $
4,000.00
$
4,451.19 $
2,000.00
$
8,535.69 $
12,000.00
$
753.24 $
$ 115,093.39 $ 315,200.00
$ 12,693.75 Idle Time
$ 125,000.00 Profit
CM
CM%
$ (6,832.30)
-71.17%
$ (2,252.68)
-23.47%
$
5,486.72
23.86%
$
5,192.72
43.27%
$
4,637.23
42.16%
$
4,175.55
37.96%
$ 10,162.74
44.19%
$
8,415.91
38.25%
$
7,278.36
36.39%
$ (3,554.03)
-7.11%
$
975.14
12.50%
$ (1,404.71)
-17.56%
$ (1,511.54)
-18.89%
$
770.53
8.56%
$
1,957.62
19.98%
$
2,640.46
24.00%
$ (1,083.17)
-9.85%
$
7,275.24
36.38%
$
(206.68)
-10.33%
$ (1,427.13) -101.94%
$
(72.83)
-0.91%
$
1,210.01
12.10%
$
(353.31)
-8.83%
$ (2,451.19) -122.56%
$
3,464.31
28.87%
$
(753.24)
$ 41,739.73
13.24%
$ (21,840.00)
$ 19,899.73
-4132 $ (2,700.30)
-1153 $ (1,099.68)
-2554 $ (1,000.03)
417 $ (1,500.17)
647 $ (1,000.31)
-1451 $ (1,000.19)
$ (8,300.68)
JOB#
61001
61002
61301
61502
61801
61901
Total
Job Preparation
0
0
2
1
0
1
4
$
$
$
$
$
$
147.64
73.82
73.82
Scanning
16
8
5
4
1
1
35
$ 1,606.15
$ 803.07
$ 501.92
$ 401.54
$ 100.38
$ 100.38
Scanning
3
9
10
3
25
$ 301.15
$ 903.46
$ 1,003.84
$ 301.15
Assembly
10
6
10
8
3
4
41
$
$
$
$
$
$
722.59
433.56
722.59
578.07
216.78
289.04
$
$
$
$
289.04
1,156.15
1,011.63
216.78
JOB#
61301
61402
61403
61603
Total
Job Preparation
1
0
0
1
2
$
$
$
$
73.82
73.82
Assembly
4
16
14
3
37
fications by customer
Output
4
$592.79
4
$592.79
2
$296.39
1
$148.20
1
$148.20
0
$
12
Output
1
2
2
1
6
$148.20
$296.39
$296.39
$148.20
Quality
Control
2
3
2
0
0
0
7
Quality
Control
1
2
1
0
4
Cost +
Total Material
$5,794
$ 172.64
32
$3,188
$ 258.97
21
$2,841
$ 172.64
21
$2,702
$
14
$1,465
$
5
$1,463
$
6
$17,454
99
$ 86.32
$ 172.64
$ 86.32
$
-
Total
10
29
27
8
74
$1,899
$3,529
$3,398
$1,240
$10,065
Description
Wages
Depreciation
Rent
Others
Total Overhead
Floor Space in sq.
ft.
Job
Preparation
$8,000
$500
$
2,000
$ 1,311.48
$11,811
1000
Scanning
Assembly
Output
$32,000
$64,000
$10,000
$25,000
$10,000
$14,000
$
2,000 $
8,000 $
4,000
$ 5,245.90 $10,491.80 $ 1,639.34
$64,245.90 $92,491.80 $29,639.34
1000
4000
2000
Quality
Control
Idle
$11,000
$500
$
1,000 13000
$ 1,311.48
$13,811.48
500 6,500
Labor Hours
Idle
Actual
OH Applied
160
640
1280
200
160
43
28
128
37
13
117
612
1152
163
147
$
73.82 $
100.38 $
72.26 $
148.20 $
86.32
73.13%
95.63%
90.00%
81.50%
91.88%
$ 8,637.14 $ 61,435.14 $ 83,242.62 $ 24,156.07 $ 12,689.29
Underapplied by
$ 3,174.33
$ 2,810.76
$ 9,249.18
$ 5,483.28
$ 1,122.18
Total
$125,000.00
$ 50,000.00
$ 30,000.00
$ 20,000.00
$225,000.00
$ 15,000.00
92.21311
15000
2440
92.21
Job#
61001
61002
61003
61101
61102
61201
61202
61203
61204
61301
61401
61402
61403
61404
61405
61501
61502
61601
61602
61603
61701
61702
61801
61901
61902
62001
Total
Total Materials
expense3
$5,400
3,500
4,500
1,800
1,500
1,500
3,300
3,400
3,200
13,000
1,800
3,100
3,900
2,100
2000
2200
3,600
3,300
600
1,000
2100
2,500
1,600
1,700
2,200
200
$75,000
Customer initiated
rework
Correction of house error
$2,700
1,100
1,000
$1,000
1,000
1,000
1,500
500
1,000
1,000
$8,300
$3,500
$8,100
$4,600
$4,500
$1,800
$1,500
$1,500
$3,300
$3,400
$3,200
$14,000
$1,800
$3,100
$3,900
$2,100
$2,000
$2,200
$5,100
$3,300
$600
$1,000
$2,100
$2,500
$2,600
$2,700
$2,200
$200