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Segmented contribution margin analysis Bon Jager Inc. manufactures and sells devices used in cardiovascular surgery. The company has two salespersons, Dean and Martin. A contribution margin by salesperson report was prepared as follows: Bon Jager Inc. Contribution Margin by Salesperson Dean Martin Sales $400,000 $480,000 Variable cost of goods sold 184,000 264,000 Manufacturing margin 216,000 216,000 Variable promotion expenses 72,000 43,200 Variable sales commission expenses 56,000 67,200 128,000 110,400 Contribution margin 88,000 105,600 Manufacturing margin as a percent of sales (manufacturing margin ratio) 54% 45% Contribution margin ratio 22% 22% Interpret the report, and provide recommendations to die two salespersons for improving profitability.

BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter
Section
Chapter 20, Problem 20.3CP
Textbook Problem

Segmented contribution margin analysis

Bon Jager Inc. manufactures and sells devices used in cardiovascular surgery. The company has two salespersons, Dean and Martin.

A contribution margin by salesperson report was prepared as follows:

Bon Jager Inc. Contribution Margin by Salesperson
Dean Martin
Sales $400,000 $480,000
Variable cost of goods sold 184,000 264,000
Manufacturing margin 216,000 216,000
Variable promotion expenses 72,000 43,200
Variable sales commission expenses 56,000 67,200
128,000 110,400
Contribution margin 88,000 105,600

Manufacturing margin as a percent of sales

(manufacturing margin ratio)

54% 45%
Contribution margin ratio 22% 22%

Interpret the report, and provide recommendations to die two salespersons for improving profitability.

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