Reference no: EM132116991

Calculate the Contribution Margin: Contribution margin = Price - (Material Cost + Labor Cost) Calculate the Margin Percentage: Margin Percentage = Contribution Margin / Price Enter the results into the top of the form. Use the bottom part of the form to determine the margin potential. Go to the Buying Criteria on the Segment Analysis pages of The Foundation FastTrack for Round 0 to find the maximum permitted price and the minimum acceptable MTBF (Mean Time Before Failure) for each segment (lowering the MTBF decreases material cost). Determine the minimum Material Cost per segment using the following equation: Minimum Material Cost = [(Lowest Acceptable MTBF * 0.30) / 1000] + Trailing Edge Position Cost from the Material Positioning Component Costs table below. Material Positioning Component Costs Trailing Edge Cost Leading Edge Cost Low Tech $1.50 $8.050 High Tech $4.00 $10.00 Determine the minimum Labor Cost for each segment. Assume a base labor cost of $11.20 ($11.20 is a rough estimate of labor cost used solely to illustrate the Margin Potential Concept). Minimum Labor Cost = [$11.20 - (1.12 * Automation Ratings Below)] + 1.12 Low Tech Automation: 10.0 High Tech Automation: 6.0 Margin Analysis Current Margin PRODUCT Name Price Material Cost Labor Cost Second Shift (Y/N) Contribution Margin $ % Margin Potential PRODUCT Name Maximum Price Minimum Material Minimum Labor Second Shift (Y/N) Contribution Margin $ % Low Tech High Tech.