Jyvaskyla Oy is a retail chain of supermarkets. For many years, it has used gross margin (selling
Question:
Each supermarket has a weekly report on product contribution:
Revenue......................................¬ R
Cost of goods sold...........................C
Gross margin (GM) ....................R - C
Goods handling costs........................D
Product contribution (PC) ........¬ GM - D
The April 2015 goods-handling cost allocation rate is ¬0.50 per cubic metre.
Required
1. Calculate the gross margin for each of the four products. Rank these four products using their gross margin percentage.
2. Calculate the product contribution for each of the four products. Rank these four products using the product contribution to revenue percentage.
3. Compare your ranking in requirement 2 with that in requirement 1. How is the requirement 2 analysis useful to Jyvaskyla management?
Step by Step Answer:
Management and Cost Accounting
ISBN: 978-1292063461
6th edition
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan