Should Sippican Use A Contribution Margin Approach?

8.20 equals $ 86,700. The contribution margin per unit at a retail price of Cr. 6.85 equal 1.95. The required volume will be the result of dividing the profit impact on the contribution margin per unit.

The available labor for utilization = Total number of workers * Hours per day *

The budget analysis shows that the labor hours of the firm are higher than the budgeted amount. As such, the firm needs to evaluate the cost benefit analysis of making or buying their products. To make this decision, various factors need to be considered. Before making the decision, Peyton needs to evaluate the marginal costs and revenue of making versus buying the products. The firm should take the option which provides the highest marginal profit which is the

Using the Resource Sheet (View > Resource Sheet), develop and print a list of resources required for your project. Include Max.Units and Costs (Std. Rate, Ovt. Rate, Cost/Use).

= Setup Time + Run Time (Per Hole) * No. of Holes drilled on each circuit board * No. of boards

The $320,000, on the other hand, is a fixed cost associated with the proposed addition.

The receiving overhead per unit of Valves produced = (0.03 X 20,000)/ 7500 = $0.1

In May 2006, Westmount Retirement Residence was having very low profitability. Its very simple pricing model essentially charged each resident the same price per month regardless of their needs. This was due to a change in the patients´ demands. In the past, patients´ demands were similar and therefore the company´s pricing and costing system was appropriate. But changes in the population and in the requirements of the residents caused that the pricing model remained out of date and the costing system inappropriate. One of the problems observed when analyzing the company´s situation was that due to the costing system used it was not possible to have a clear picture of how much each of the services offered were costing. Consequently, it was clearly very difficult being able to define a pricing system that will give the shareholders the desired profit. The first step was to design a new costing system adequate for the company

The allocation of the New Product Development costs is also questionable. Even though these costs are being utilized to create new products, the established products are bearing the costs based on their profits.

was 7,920 units. The company has provided the following data concerning the formulas to be used in its

• This cost method does not provide the best system for JDCW’s cost allocation. By using only three overhead rates the present system grossly undermines the true production costs since other activities of the production process are not acknowledged.

hours, as well as accounting for the set up labor costs for every run. The material

The two plans, Sarnia 1 and Sarnia 2 are producing halobutyl and regular butyl, respectively. The newly regular butyl plant, Sarnia 2, is running at less than capacity. The plant should be able to produce 95,000 tonnes, but the actual production is only 65,000. This creates a lot of unabsorbed fixed costs and inefficiency.

| | | | | | | | | | | | | |75000 | |100000 | |125000 | |150000 | |175000 | |200000 | | |  | |  | |  | |  | |  | |  | |Direct Labor |4.00 |  |3.90 |  |3.80 |  |3.70 |  |3.80 |  |4.00 | |Material |2.00

Correct the EOQ and ROP quantities for each of the five items mentioned in the case.