To

The Management

Delhi Components

Subject: Recommendation

From the exhibit-2, it is clearly found that the costs have been divided into two main types which are Direct Cost and Overhead Cost. In the year 2008, the overhead cost was 16.41 which decreased with each passing year and reach on a level of 7.48 by the end of the year 2014. The overhead cost is also decreasing with the year on year. With the proper management of the operational cost that includes both, the direct cost and overhead cost, the net income becomes wider in the following years as compared to the previous years.

From the exhibit-4, it is found that there are a total of two products that have positive net operating income in the financial year 2014 which are electronic & safety and Electronic Architecture. The company is expected to maintain the same aspect in the future for their efficiency and development.

  1. Delhi System were profitable during the recession, but reported a large loss in the year 2010. The main reason behind the loss was the increasing operational cost of the company due to which the operating income decreased
  2. The operating profit for product-1 is $ 42, while it is $32 for Product-2 in both of the financial years 2009 and 2010. Based on the same outcome, it can be said that the company should go with Product-1

The company should discontinue the product of Powertrain System, as it continuously increasing the net loss for the company, which is not efficient for them. The management of the company should undertake Product-1 for their development.