Margin Analysis

Being able to calculate a healthy Margin Analysis will help the Research & Development Department understand how to change the cost of material and the Production Department understand how to change the cost of labor.

You will need:

The Production Analysis report (page 4) of the Capstone Courier for Round 0

The Segment Analysis reports (pages 5-9) of the Capstone Courier for Round 0

Determining Current Margin

* The above product details are for example only. Your product names and data may differ, but the process to calculate margins is identical.

Useful formulas: Contribution Margin($) = Price - (Material Cost + Labor Cost) Margin Percentage (%) = Contribution Margin/Price

Calculating Margin Activity

In the table below enter each product's price, material cost, and labor cost found in your report, and note whether or not a second shift was used (Y/N). Then, use the values you entered to calculate the Contribution Margin and the Margin Percentage.

Incomplete

Current Margin
Product	Name	Price	Material Cost	Labor Cost	Second Shift (Y/N)	Contribution Margin ($)	Contribution Margin (%)
Traditional
Low End
High End
Performance
Size

The Round 0 Capstone Courier

2nd Shift Auto Materialb Co OverNext 4.0 & mation Capacity Primary UnitsInven Age Pfmn Size Next Plant Sold tory time Able Acre Adam Aft Agape Trad High Size 999 189 5/25/2009 4/18/2012 6/30V2011 1.800 66% 1.400 129% 000 45% 600 73% 600 63% 4.6 14000 3.0 17.0 $21.00 $7.81 S7.12 27% 30% 1.7 23000 8.0 120 $38.00 S15.98 S8.57 33%j0% 2.525000 9.4 15, 3.00 $15.87 $8.57 23% 0% 2.619000 4.0 11. 3.00 $13.62 $8.57 30% 0% 1,763 5.0 358 314 62 522011 3.0 2nd Shift Auto Materialb Co OverNext 4.0 & mation Capacity Primary UnitsInven Age Pfmn Size Next Plant Sold tory time Able Acre Adam Aft Agape Trad High Size 999 189 5/25/2009 4/18/2012 6/30V2011 1.800 66% 1.400 129% 000 45% 600 73% 600 63% 4.6 14000 3.0 17.0 $21.00 $7.81 S7.12 27% 30% 1.7 23000 8.0 120 $38.00 S15.98 S8.57 33%j0% 2.525000 9.4 15, 3.00 $15.87 $8.57 23% 0% 2.619000 4.0 11. 3.00 $13.62 $8.57 30% 0% 1,763 5.0 358 314 62 522011 3.0