Business, 15.07.2020 05:01 yedida

Finding the maximum amount of profit you can get 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 it’s simplest form, it is calculated 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)] + 1.12
Customer Segment Information
Trailing Edge Material Cost Leading Edge Material Cost Lowest Acceptable MTBF Maximum Price Automation Level (out of 10)
Low Tech $1.50 $8.50 14,000 $35.00 10.0
High Tech $4.00 $10.00 17,000 $45.00 6.0
Margin Potential
Product Name Maximum Price Minimum Material Cost Minimum Labor Cost Contribution Margin ($) Contribution Margin (%)
Low Tech
High Tech

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 13:30

What do you recommend adam do to increase production in a business setting that does not seem to value high productivity?

Answers: 3

Answer

Business, 22.06.2019 16:00

Winners of the georgia lotto drawing are given the choice of receiving the winning amount divided equally over 2121 years or as a lump-sum cash option amount. the cash option amount is determined by discounting the annual winning payment at 88% over 2121 years. this week the lottery is worth $1616 million to a single winner. what would the cash option payout be?

Answers: 3

Answer

Business, 22.06.2019 17:40

Solomon chemical company makes three products, b7, k6, and x9, which are joint products from the same materials. in a standard batch of 320,000 pounds of raw materials, the company generates 70,000 pounds of b7, 150,000 pounds of k6, and 100,000 pounds of x9. a standard batch costs $3,840,000 to produce. the sales prices per pound are $10, $14, and $20 for b7, k6, and x9, respectively. (a) allocate the joint product cost among the three final products using weight as the allocation base. (b) allocate the joint product cost among the three final products using market value as the allocation base. (c) allocate the joint product cost among the three final products using weight as the allocation base.

Answers: 3

Answer

Business, 22.06.2019 18:00

Biochemical corp. requires $600,000 in financing over the next three years. the firm can borrow the funds for three years at 10.80 percent interest per year. the ceo decides to do a forecast and predicts that if she utilizes short-term financing instead, she will pay 7.50 percent interest in the first year, 12.15 percent interest in the second year, and 8.25 percent interest in the third year. assume interest is paid in full at the end of each year. a)determine the total interest cost under each plan. a) long term fixed rate: b) short term fixed rate: b) which plan is less costly? a) long term fixed rate plan b) short term variable rate plan

Answers: 2

Answer

You know the right answer?

Finding the maximum amount of profit you can get from one unit of a product is called Margin Potenti...

Questions