Margin Analysis 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 The Segment Analysis reports (pages 5-9) of the Capstone Courier for Round 0 Determining Current Margin Name Primary Segment Trad Sold . here Adam Contr. 1.763 High Revon Don 11212010 V2000 4/18/2012 30/2011 525/2011 Age P Dect MTBF CoordCoordPrice 21 17500 5.5 145I 200 46 14000 170 21.00 17 23000 80 120 00 25 25000 94 155 15 00 26 10000 40 11001000 More Material Labor Cool Cost $11.50 $7249 781 712 $15. 9 5 SI587 57 $13257 2015 Agape Capacity Next Pa Round UNE 100 G 400 20 00455 600 73 800 ON * The above product details are for example only. Your product names and data may differ, but the process to calculate margina is identical Useful formulas: Contribution Margin($) - 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 Traditional Able Price Material Cost Labor Cost Second Shift(Y/N) Contribution Margin (5) Contribution Margin (1) Low End Acre High End Adam Performance Size Aft Agape The Round 0 Capstone Courier Determining Margin Potential Determining Margin Potential Finding the maximum amount of profit you can generate from one unit of a product is called Margin Potential. This is useful for a company when making a decision about whether to go into production or not. In its simplest form, you can calculate Margin Potential as: Margin Potential Maximum Price - Minimum Unit Costs Price Use the information table below to find the maximum price that customers doem acceptable. You can find this in the Customer Buying Criteria for each segment. Minimum Material Cost Minimum Labor Cost Calculate the minimum Material Cost per segment using the following Calculate the minimum Labor Cost for each segment. Assume a base equation and table below: labor cost of $11.20 ($11.20 is a rough estimate of labor cost used solely to illustrate the Margin Potential Concept). Minimum Material Cost = f(Lowest Acceptable MTBF0.30)/1000 Trailing Edge Position Cost Minimum Labor Cost = ($11.20 - (1.12. Automation Ratings Below 1.12 Customer Segment Information Trailing Edge Material Leading Edge Material Lowest Acceptable Maximum Automation Level (out of Cost Cost MTBF 10) Traditional $3.80 $7.80 14.000 $30,00 Low End $5.00 $1.00 12,000 10.0 $25.00 High End $6.00 $10.00 20,000 $40.00 Performance $4.50 $8.50 22,000 $35.00 Size $4.50 $8.50 6.0 10,000 $35.00 Price 8.0 6.0 Margin Potential Minimum Labor Contribution Margin Maximum Price Minimum Material Cost Contribution Margin (9) Name Product Traditional Able Low End High End Adam Performance Aft Size Agap The Round Capton Courier Ne Previous