What is the contribution margin per unit

Reference no: EM13786536

Robin Simmons is ready to complete a cost-volume-profit analysis for 2016 for the Stellar Packaging Products manufacturing plant to determine if the break-even point is achieved, given the expected decline in volume. Specific costs for production of 500,000 units include the following:

Stellar Packaging Products	Variable Costs Total	Fixed Costs Total
Raw materials	$ 400,000
Direct manufacturing labor	$ 200,000
Indirect manufacturing labor		$ 105,000
Factory Insurance & Utilities		$ 63,000
Depreciation -- Machinery and factory		$ 38,500
Repairs and maintenance -- factory		$ 28,000
Selling, marketing and distribution expenses	$ 40,000	$ 80,000
General and administrative expenses		$ 120,000

There are no beginning or ending inventories. The total sales for 500,000 units produced are $2,000,000.

Instructions: Answer the following questions given the fact pattern above, showing all calculations.

What is the contribution margin per unit for each chocolate bar produced, given the fact pattern above?
What is the Stellar Packaging's U.S. division break-even point in units and dollars, given the fact pattern above?
What is the Stellar Packaging's U.S. division margin of safety and degree of operating leverage, given the fact pattern above?
Write a brief explanation (approximately two paragraphs) that Simmons might deliver to management to inform them of the analytical outcome, given the projected revenue and cost. Does the company have to implement a cost-reduction strategy in order to break even?

Reference no: EM13786536

Questions Cloud

Explain what is referred to as walrasian economics : Explain what is referred to as ‘Walrasian economics', its developed role in economic theory and pedagogy, and its likely prospects for providing satisfactory explanation of economic realities.

What business decision an organization should make solution : Explain what business decision an organization should make based on the solution.

Evaluation of the franchise valuation issues : When sports organizations want to finance a new stadium or arena, what specific options do they have for generating the necessary financing?

Write a program to generate an ascii-graphics : Write a program to generate an ASCII-graphics of an equilateral triangle. The input to your program is a single integer number representing the length of the side of the triangle. This number must be 2 or larger.

What is the contribution margin per unit : What is the contribution margin per unit for each chocolate bar produced, given the fact pattern above? What is the Stellar Packaging's U.S. division break-even point in units and dollars, given the fact pattern above?

Researcher offer as a test of their hypothesis : In this assignment, you will read an article about the Mozart effect and identify various parts of the research process. This exercise will help you learn how to read a research article and to understand the research process.

Compare and contrast two events motivated by incentives : Compare and contrast two events motivated by incentives, one where the self-interested behavior was good for society and the other where it was bad

The p.p.a.c.a. and other federal policies issues : Compare and contrast this problem in the U.S. to that of other countries. How does this issue in the U.S. compare to other countries?

Supply chain analysis for proposed new division business : Conduct an internal and external environmental analysis, and a supply chain analysis for your proposed new division and its business model.

User Account

All Pages