Marlboro red 100s cigarettes — cigarettes

var layerHeight 1000 // . var iFrame 1 // . var iFrequency 100 // . var timer // . if( («rolllinkk2»).offsetHeight > layerHeight) («rolllinkk») layerHeight else («rolllinkk») («rolllinkk1»).offsetHeight («rolllinkk2»).innerHTML («rolllinkk1»).innerHTML function move() if( («rolllinkk»).scrollTop > («rolllinkk1»).offsetHeight) («rolllinkk»).scrollTop ( («rolllinkk1»).offsetHeight iFrame) else («rolllinkk»).scrollTop iFrame timer setInterval(«move()»,iFrequency) («rolllinkk»).onmouseover function() clearInterval(timer) («rolllinkk»).onmouseout function() timer setInterval(«move()»,iFrequency)

What is the true cost of manufacturing a carton of marlboro cigarettes.

  • Click arrows to navigate
  • Here is a typical manuacturing model from «Health Canada» website. Notice taxes taking $42.89 out of the proposed $53.01 wholesale price. This is a Canadian site and dollar amounts are Canadian. US
  • and Canadian exchange rates at time of article (2002) are apporximately $1 Canadian $.63 US. Canadian taxes have typically been higher than US rates on tobacco products. Production costs in US are
  • believed by many to be less due to superior automation and local tobacco farming. «To analyse the impact of an ignition propensity standard on cigarette manufacturing costs, a baseline model of the
  • cost structure of a representative cigarette manufacturer was developed. Exhibit 2 9 presents this model. The figures in Exhibit 2 9 show that total manufacturing costs (i.e., before operating
  • profits and taxes) for a representative cigarette manufacturer are approximately $5.70 per carton. Of this amount, materials comprise the major cost factor, while labour constitutes a relatively small
  • portion of costs, reflecting the largely automated nature of cigarette production. Purchased leaf tobacco is the largest single cost input at $1.15 per carton, or more than 20 percent of total costs.
  • Handling, transport and storage costs for tobacco at the early stage of production are also significant, at approximately 17 percent of total costs. Subsequent steps in the production process
  • tobacco processing, plug making, and cigarette making together account for approximately 19 percent of total costs. Packaging and shipping costs represent 14 percent of the total, while general
  • business expenses (which include building depreciation and overhead) account for the remaining 30 percent. The model estimates operating profits of $4.43 per carton. Thus, operating profits represent
  • approximately 44 percent of the before tax wholesale price of a carton of cigarettes. When taxes are taken into account, however, the price charged by manufacturers an estimated $10.12 per carton
  • represents only 19 percent of the estimated wholesale price of $53.01 per carton. Exhibit 2 9 Cost Structure of a Representative Cigarette Manufacturer (2002 Canadian Dollars per Carton of 200
  • Cigarettes) Labour Energy Materials Depreciation Total Purchased Leaf Tobacco $1.152 $1.15 Handling, Transport and Storage $0.98 Tobacco Processing $0.00 $0 .032 $0.22 Plug Making (1) $0.081
  • $0.007 $0.326 $0.004 $0.42 Cigarette Making (2) $0.148 $0.014 $0.253 $0.036 $0.45 Packaging/Shipping (3) $0.220 $0.020 $0.511 $0.015 $0.77 Business Expenses $1.71 Operating Profits $4.43 Taxes
  • (4) $42.89 Total Wholesale Price $53.01 (1) Materials cost includes filter materials, adhesives, paper wraps and flavourings. (2) Materials cost includes paper, tipping materials, starch,
  • adhesives and ink. (3) Materials cost includes packets, foil, plastic wrap, tear tape, adhesives, cartons and cases. (4) Includes Provincial Tobacco Tax, Federal Excise Tax and Federal Excise Duty.