1. Contribution Margin

Wiseman Inc. Manufacturing produces Health Drinks in a Manufacturing facility. The products are:

• Health Shake
• Pre-Work out
• Post- Work out

Wiseman introduced a 4^th Product: Health bar, made from 3 most healthy food inputs, Broccoli, Beetroot and Locusts.

Wiseman produces all these health products in the same manufacturing facility and cannot change fixed costs for 3 years.

Products/Account Codes	Health Shake	Pre-Work out	Post-Work out	Health Bar	Wiseman Total
Sales	10,000	40,000	62,000	22,000	134,000
Cost of Goods sold	7,200	26,000	41,000	18,100	92,300
Other Relevant Costs	1,000	2,200	4,400	4,100	11,700
Contribution Margin	1,800	?	16,600	(200)	30,000
Allocated fixed Costs	2,000	6,000	8,800	4000	20,800
Operating Income	(200)	5,800	?	(4,200)	9,200

REQUIRED:

1. Calculate:
   • the Contribution Margin for Pre-Work
   • the Operating Income for Post-Work out
2. Write out a definition for Contribution Margin.
3. Referencing the above definition, which of the above product lines would you cut (stop production on) to increase profitability of Wiseman Inc. Manufacturing?
   • Explain why you would continue production with other products.
   • Choose the company/companies that you would stop production on and explain why.