Contribution margin

Managers must average the contribution margins for all the products to perform cost volume profit analysis and this is not effective as getting an accurate contribution margin for one product (SimpleStudies, 2004). It is argued that selling prices and variable cost per unit do not change with volume but in real life situations, they change due to economy…

resulting in zero profit. We will also compare contribution margins statements, margin of safety and degree of operating leverage of each decision. Further, we will be exploring issues and providing recommendations on the number of sales needed to achieve a target profit of $100,000.…

company neither makes a profit or takes a loss. In order to break even a company must make enough revenue to cover its variable and fixed expense (Berry, 2015). Refer to section 2.2 for more information on variable and fixed expenses. 2.4.1 Contribution…

Contribution margin(THB)/month Commission rate To threshold (0 30,000)01st Commission RateFrom threshold to target (30,000 37,353)542nd Commission RateAbove 100Y Commission Rate for Contribution Margin above Target (Y) The contribution margin above the target amount represents the profit to the company beyond the cost of capital. This profit can be shared with the sales…

In round 4 of the simulation, Erie lost ⅘ stars. The positioning of the production schedule slider affected the star outcomes heavily. Erie lost the emergency loan, contribution margin, profit, and stock price stars. Erie had two products by round 4, and both contributed to star loss. The product Eat was set at 2,300 units. The decision for Eat’s slider was made based on the sales forecast the company had set. The sales forecast came from a spreadsheet, which calculated an estimate based on…

due to unfavorable price variance, cartooning labor and spoilage. Question 2 Calculate the gross margin mix variance, then calculate a detailed (i.e., flavor-by-flavor) Mix variance. For what purposes would the detailed analysis be more useful than the aggregate mix variance calculation? For calculating the gross margin mix variance, the presenting group used the overall budgeted contribution margin and then calculated the forecast sales at budgeted mix, actual sale at budgeted mix and actual…

1. The difference between absorption and variable costing is in how they mange fixed manufacturing overhead. Under absorption costing, fixed manufacturing overhead is treated as a product cost, therefore, is an asset until products are sold. Under variable costing, fixed manufacturing overhead is treated as a period cost and is immediately expensed on the income statement. Both methods threated all other costs the same way. 2. Selling and administrative expenses are treated as period costs under…

million in sales. The company’s forecast of a 4% increase in 2008 sales is in line with expectations for the furniture industry as a whole. The president of the company expects increasing costs to reduce the contribution margin to 20%. He would like to attain a 5% pre-tax profit margin which would be a slight increase from the current 4.9%. Company policy limits promotional expenditures to 5% of sales. In 2007, 4.9% of total sales were spent on promotional costs including sales and sale…

results be realised, Sun Worship Leisure Wear will have achieved a 29% profit margin, indicating positive financial efficiency and stability. Additionally, it is budgeted that Sun Worship Leisure Wear will have having produced 27,470 units, sold 27,340 units and at the conclusion of 2018, Sun Worship Leisure Wear will have a cash surplus of $499,252, 2. Product Analysis The Bikini line has the most positive contribution margin at 36.11%, both the Board Short and Towels lines are also…

i. Introduction Wilkerson Company is facing an issue where the company is facing lower pre-tax operating margin. Their pre-tax operating margin being that of 3%, and when that is compared to other pre-tax operating margins, it was found that other companies are about 10% pre-tax operating margin (Kaplan, 2001) . Therefore, Wilkinson is 7% lower. Fortunately for Wilkerson, they have increased their prices by 10% and it has not affected the buyers, so they have not lost any business in doing so…