Production Information Primary Units Inven Name Segment Sold Able Acre Trad 999 Low 1,763 Adam High 366 Aft Pfmn 358 Agape Size 314 Baker Trad 999 Bead Low 1,763 Bid High 366 Bold Pfmn 358 Buddy Size 314 Cake Trad 999 Cedar Low 1,763 Cid High 366 Coat Pfmn 358 Cure Size 314 Daze Trad 999 189 Dell Low 1,763 Duck High 366 Dot Pfmn 358 Dune Size 314 Eat Ebb Trad Low 999 189 1,763 Echo High 366 Edge Pfmn 358 Egg Size 314 Fast Trad 999 Feat Low 1,763 Fist High 366 Foam Pfmn 358 Fume Size 314 Unit 2nd Auto Shift & mation Capacity Age Pfmn Size tory Revision Date Dec.31 MTBF Coord Coord Price Material Labor Contr. Cost Cost Marg. Over- Next time Round Next Plant Round Utiliz. 39 11/21/2018 5/25/2017 40 4/18/2020 78 6/30/2019 62 5/25/2019 3.1 17500 5.5 4.6 14000 3.0 1.7 23000 2.5 25000 2.6 19000 8.0 9.4 4.0 14.5 $28.00 $11.59 $7.49 17.0 $21.00 $7.81 $7.12 12.0 $38.00 $15.98 $8.57 15.5 $33.00 $15.87 $8.57 29% 0% 4.0 1,800 66% 27% 30% 5.0 1,400 129% 33% 0% 3.0 900 45% 23% 0% 3.0 600 73% 11.0 $33.00 $13.62 $8.57 30% 0% 3.0 600 63% 189 11/21/2018 3.1 17500 5.5 14.5 $28.00 $11.59 $7.49 29% 0% 4.0 1,800 66% 39 5/25/2017 4.6 14000 3.0 17.0 $21.00 $7.81 $7.12 27% 30% 5.0 1,400 129% 4/18/2020 1.7 23000 8.0 12.0 $38.00 $15.98 $8.57 33% 0% 3.0 900 45% 78 6/30/2019 2.5 25000 9.4 15.5 $33.00 $15.87 $8.57 23% 0% 3.0 600 73% 5/25/2019 2.6 19000 4.0 11.0 $33.00 $13.62 $8.57 30% 0% 3.0 600 63% 11/21/2018 3.1 17500 5.5 14.5 $28.00 $11.59 $7.49 29% 0% 4.0 1,800 66% 39 5/25/2017 4.6 14000 3.0 17.0 $21.00 $7.81 $7.12 27% 30% 5.0 1,400 129% 4/18/2020 1.7 23000 8.0 12.0 $38.00 $15.98 $8.57 33% 0% 3.0 900 45% 6/30/2019 2.5 25000 9.4 62 5/25/2019 2.6 19000 4.0 15.5 $33.00 $15.87 $8.57 11.0 $33.00 23% 0% 3.0 600 73% $13.62 $8.57 30% 0% 3.0 600 63% 11/21/2018 5/25/2017 4/18/2020 6/30/2019 3.1 17500 4.6 14000 1.7 23000 2.5 25000 5.5 14.5 $28.00 $11.59 $7.49 29% 0% 4.0 1,800 66% 3.0 17.0 $21.00 $7.81 $7.12 27% 30% 5.0 1,400 129% 8.0 12.0 $38.00 $15.98 $8.57 33% 0% 3.0 900 45% 9.4 15.5 $33.00 $15.87 $8.57 23% 0% 3.0 600 73% 5/25/2019 2.6 19000 4.0 11.0 $33.00 $13.62 $8.57 30% 0% 3.0 600 63% 11/21/2018 3.1 17500 5.5 14.5 $28.00 $11.59 $7.49 29% 0% 4.0 1,800 66% 5/25/2017 4.6 14000 3.0 4/18/2020 6/30/2019 5/25/2019 1.7 23000 2.5 25000 2.6 19000 8.0 9.4 4.0 17.0 $21.00 12.0 $38.00 $15.98 $8.57 15.5 $33.00 $15.87 $8.57 11.0 $33.00 $13.62 $8.57 $7.81 $7.12 27% 30% 5.0 1,400 129% 33% 0% 3.0 900 45% 23% 0% 3.0 600 73% 30% 0% 3.0 600 63% 11/21/2018 5/25/2017 3.1 17500 4.6 14000 5.5 14.5 $28.00 $11.59 $7.49 29% 0% 4.0 1,800 66% 3.0 17.0 $21.00 $7.81 $7.12 27% 30% 5.0 1,400 129% 4/18/2020 6/30/2019 5/25/2019 1.7 23000 2.5 25000 2.6 19000 8.0 12.0 $38.00 $15.98 $8.57 33% 0% 3.0 900 45% 9.4 15.5 $33.00 $15.87 $8.57 23% 0% 3.0 600 73% 4.0 11.0 $33.00 $13.62 $8.57 30% 0% 3.0 600 63% CAPSTONE COURIER Page 4 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 0 The Segment Analysis reports (pages 5-9) of the Capstone Courier for Round 0 Determining Current Margin 2nd Shift Auto Primary Name Segment Units Sold Unit Inven tory. Revision Date Able Trad 999 189 11/21/2010 Acre Low 1,763 39 5/25/2009 Adam High 366 40 4/18/2012 Aft Pfmn 358 78 Agape Size 314 62 6/30/2011 5/25/2011 Age Dec.31 MTBF Coord 3.1 17500 4.6 14000 1.7 23000 2.5 25000 2.6 19000 Pfmn Size Material Labor & Contr. Over- mation Capacity Next Coord. Price Cost Cost Marg time, Round Next Plant Round Utiliz 5.5 14.5 $28.00 $11.59 $7.49 29% 0% 4.0 1,800 66% 3.0 17.0 $21.00 $7.81 $7.12 27% 30% 5.0 1,400 129% 8.0 12.0 $38.00 $15.98 $8.57 33% 0% 3.0 900 45% 9.4 4.0 15.5 $33.00 11.0 $33.00 $15.87 $8.57 $13.62 $8.57 23% 0% 3.0 600 73% 30% 0% 3.0 600 63% * The product details are for example only. Your product names and data may differ, but the process to calculate margins is identical. Useful formulas: Contribution Margin($) = 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 Useful formulas: Contribution Margin($) = Price - (Material Cost + Labor Cost) Margin Percentage (%) = Contribution Margin/Price Calculating Margin Activity In the table below enter each product's price, material cost, and labor cost found in your report, and note whether or not a second shift was used (Y/N). Then, use the values you entered to calculate the Contribution Margin and the Margin Percentage. Incomplete Current Margin Product Name Price Material Cost Second Shift Contribution Margin Labor Cost (Y/N) ($) Contribution Margin (%) Traditional Cake 0 0 Low End Cedar 0 0 High End Cid Performance Coat Size Cure The Round 0 Capstone Courier 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 deem acceptable. You can find this in the Customer Buying Criteria for each segment. Minimum Material Cost Calculate the minimum Material Cost per segment using the following equation and table below: Minimum Material Cost = [(Lowest Acceptable MTBF *0.30) / 1000] + Trailing Edge Position Cost Minimum Labor Cost Calculate the minimum Labor Cost for each segment. Assume a base labor cost of $11.20 ($11.20 is a rough estimate of labor cost used solely to illustrate the Margin Potential Concept). Minimum Labor Cost = [$11.20 - (1.12 * Automation Ratings Below)] + Customer Segment Information 1.12 Trailing Edge Material Cost Leading Edge Material Cost Lowest Acceptable MTBF Maximum Price Automation Level (out of 10) Traditional $3.80 $7.80 14,000 $30.00 8.0 Low End $1.00 $5.00 12,000 $25.00 10.0 High End $6.00 $10.00 20,000 $40.00 5.0 Performance $4.50 $8.50 22,000 $35.00 6.0 Size $4.50 $8.50 16,000 $35.00 6.0 Margin Potential Maximum Minimum Material Product Name Price Cost Traditional Cake 0 0 Low End Cedar 0 0 High End Cid Performance Coat Size Cure The Round 0 Capstone Courier Previous Minimum Labor Contribution Margin Contribution Margin Cost ($) (%) Next