ipl-logo

What Does Contribution Margin Mean

436 Words2 Pages

A- To determine contribution margin per labor. The contribution margin for Product M will have to be divided by the labor hours it takes to produce the product. The same thing will have to take place for Product N. The Contribution margin for Product N will have to be divided by the labor hours it takes to produce the product. So in this particular case when the contribution margin for Product M is $24.00 and the labor hours to produce is 3. The Contribution margin per labor hour is $8.00. The contribution margin for Product N is $30 and the labor hours to produce is 5. The contribution margin per labor hour is $6.00. Based off of this information on the contribution margin per labor hour it would seem that Product M should be produced. B- The contribution margin for Product M is $24 and units produced and sold are 8000. To determine the total contribution …show more content…

To determine the total contribution margin the contribution margin amount of $30 will need to be multiplied by the units produced and sold count of 7000. By doing this the total contribution margin amount is $210,000. Based off of this information it would seem that Product N should be sold. Because it appears to have the higher per unit contribution margin and the higher total contribution margin. C- The contribution margin for product N is $30. The machine house to produce is 6 machine hours. To determine the total contribution margin per machine hour $30 would have to be divided by 5. This makes the total contribution margin per machine hour for Product N $5.00. Based on this information the contribution margin per machine hour, Product M should be produced. Because the company has maximum capacity of 24,000 machine house and can sell all the products it produces, Product M will increase profits by $144,000 (for example $6 x 24,000 hours) where Product N can only increase profits by $120,000 (for example $5 x 24,000

Show More
Related

  • Middlehurst House Executive Summary

    781 Words  | 4 Pages

    Will creating a class for infant care be profitable for the company? CURRENT DATA: (Exhibit 2) Middlehurst House Daycare, currently have a total of six classes with approximately 80 students. The children are divided into age groups of two to three years, three to four years, four to five years and five to six years of age. The age group two to three has a total of 20 children, 15 the age group of three to four, 15 in the age group of four to five, and finally 30 in the age group of five to six. The combined total for all group equals a total of 80 children.

    Read More

  • Econ 2113 Case Study

    2057 Words  | 9 Pages

    Econ 2113 Problem Set 2 20258251 1(i). At $14 a pizza, Pat’s profit-maximizing output is 4 pizzas an hour and economic profit is $2 an hour. Marginal revenue equals price, which is $14 a pizza. The marginal cost of increasing output from 3 to 4 pizzas an hour is $13. The marginal cost of increasing output from 4 to 5 pizzas an hour is $15.

    Read More

  • Conservative Allocation: A Case Study

    73 Words  | 1 Pages

    • Emergency Fund: I would recommend that the emergency fund be invested in a conservative allocation. This will allow the funds to be more liquid and more accessible if an emergency arises. In order to reach your goal of having six months of total dedicated and discretionary expenses in a two-year time frame means that you would need to save $1,840.47 a month. The chart below illustrates the conservative allocation that I

    Read More

  • Home Depot Financial Analysis

    1572 Words  | 7 Pages

    The profit margin that a company maintains is a very important measure of success and health of the company, it can be calculated

    Read More

  • Brian Douglas Is The Corporate Financial Analyst Of Simpson And Selph, Ltd.

    1676 Words  | 7 Pages

    BA 2802 – Principles of Finance – Section 1 CASE REPORT Executive Summary Brian Douglas, who is the corporate financial analyst of Simpson and Selph, Ltd., was given responsibility of analyzing the situation of existing carpet-binding machine and evaluating the possible replacement of it with one of the two alternatives, Harley and Davidson, if it is necessary. He is currently facing three possible scenarios regarding the situation: 1. Continue with the current machine 2. Replace it with Harley 3. Replace it with Davidson

    Read More

  • How Did Jp Morgan Contribute

    303 Words  | 2 Pages

    Generous donations are always appreciated, especially for a cause such as a love for art or literature. JP Morgan himself was an art lover, and helped fund, in fact spearheaded the project, the Metropolitan Museum of Art. He donated his entire art collection, which he started when he was just 19, and even was a trustee of the museum for 44 years. Contributions to the museum, notes Strouse, were “collections of minerals, gems, meteorites, amber, books, prehistoric South American relics, American Indian costumes, fossil vertebrates, skeletons, and the mummy of a pre-Columbian miner preserved in copper salts.” (J. P. Morgan - The Philanthropy Roundtable)In addition, he gave $500,000 towards the Cathedral of ST.

    Read More

  • Intel Corporation: Financial Analysis

    1786 Words  | 8 Pages

    The first estimate figure I will choose is the cost of inventory, because Intel Corporation is an information technology company mean the inventory will go out to date in the short time. Intel need to constantly doing the innovation on their product to remain their position in the market, for example Intel processor. Intel needs to keep doing the innovation so the product can fit the market needs like smaller, faster and cheaper system. Intel’s inventory is a combination of raw material, work in progress and finish goods. Raw material is unprocessed items to be used to manufacturing or production process.

    Read More

  • Microsoft Capstone Case Analysis

    1052 Words  | 5 Pages

    As a result, we expect the total cost to be $320,000. We expect to see a positive accounting profit of $119,890 in the first year. To break-even, we would need to sell 3,002 units, or $120,050, to cover all expenses and begin to make a

    Read More

  • What Is Hielta Oy Uses The Weighted Average Method

    882 Words  | 4 Pages

    Data for a recent month for the first department follow: units material labor overhead WIP beginning 5,000 $4,320 $1,040 $1,790 units started in process 45,000 unit transferred out 42,000 WIP ending 8,000 cost added during the month $52,800 $21,500 $32,250 The beginning work in process inventory was 80% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 75% complete with respect to materials and 50% complete with respect to labor and overhead. Required: Assume that the company uses the weighted-average method of accounting for units and costs.

    Read More

  • Cumulative Advantages And Disadvantage Theory

    1052 Words  | 5 Pages

    Jyotsana Parajuli GTY 702 Reflective Paper-1 Cumulative Advantage/Disadvantage Theory The number of older adults is increasingly rapidly in the United States with the graying of baby boomers and increasing is the longevity. Moreover, the population of older adults today is the most diverse in the history of the United States. This diversity has contributed to socio-economic inequalities and health disparities among older adults. Some people are advantaged early on in life and remain advantaged throughout their life course ending up with better health and socio-economic condition in their later life; however, those who begin with disadvantages early on in life accumulate disadvantages over the life course and hence result in low socio-economic

    Read More

  • Investment Advisors Case Summary

    2255 Words  | 10 Pages

    1. Please describe the role of an investment advisor? What are the outcomes for a good advisor? In which case the client and the advisor will be in “win-win situation”? Investment advisors provide clients, which are the individual investors advice on financial matters including financial planning and selling securities and make recommendations on the on ways to best utilize their money.

    Read More

  • Case Study: Cash Budget For Cotton And Linen

    903 Words  | 4 Pages

    Homework 10 1) Decision Case 22-2 1. a) Cash Budget for Cotton and Linen Anne Manuson Cash Budget - Cotton 4 months until 31st December 2011 Beginning Cash Balance 25 Cash receipts: Cotton Sales (25 x (0.9x$20)) 450 Cash available 475 Cash disbursement - Account Payable Total Cash Disbursement 74 (74)

    Read More

  • Diversified Inc Case Study

    995 Words  | 4 Pages

    If there is no loss of income expected to take place due to the reduction of the cost prices, then the components may not need to be adjusted to market to the balanced quantities. If the components are entered into the same finished products’ inventory and are in balanced quantities, then the lower of cost or market can be directly applied to the totals of the entire inventory; if not, then apply only to the individual inventory, this procedure is applied consistently from year to

    Read More

  • Finance Case Study 3 Investing In Options

    767 Words  | 4 Pages

    Case Study 3: Investing in Options 1. A. The put option contract “AAPL171117P00175000” has a strike price closest to being at the money at $175. The current share price of AAPL is = $174.25. The current price for the put option is = $298 (2.98*100).

    Read More

  • Harry Markowitz's Theory Of The Modern Portfolio Theory

    943 Words  | 4 Pages

    Portfolio choice Modern portfolio theory More than 60 years ago Harry Markowitz established a whole new concept for optimizing portfolios, by focusing on a holistic approach of several assets to build a portfolio rather than to restrict the investment to a single seemingly profitable asset. In his article “Portfolio selection” from 1952, he derived a normative decision rule to build efficient portfolios. With this decision rule, he laid the foundation for a theory, which was later called the modern portfolio theory. About 40 years later in 1990 Harry Markowitz won the Nobel prize together with Merton H. Miller and William F. Sharpe for their pioneering work in the theory of financial economics.

    Read More

More about What Does Contribution Margin Mean

Open Document