MKTG 3310 Business Logistics Homework 5 Questions - SHOW ALL WORK Complete the C

ID: 369186 • Letter: M

Question

MKTG 3310 Business Logistics Homework 5 Questions - SHOW ALL WORK

Complete the Contribution Margin Income Statement for two customers based on the following information:

a. Assume indirect costs are $55,000 and cannot be traced to a specific segment.

b. Calculate the total net profit.

c. Remember to include variable gross profit, gross segment contribution, net segment contribution, total net profit, and net segment contribution ratio.

d. Which firm has the better net segment contribution ratio and why?

Company A Company B

Revenue - $250,000 Revenue - $310,000

Variable Direct Cost - $19,000 Variable Direct Cost - $28,000

Fixed Direct Cost - $54,000 Fixed Direct Cost - $46,000

Variable CoGS - $68,000 Variable CoGS - $65,000

Explanation / Answer

COMPANY A

COMPANY B

REVENUE

250000

310000

Less Cost of Variable goods sold

68000

65000

GROSS CONTRIBUTION MARGIN

182000

245000

Less Variable Direct Cost

19000

28000

CONTRIBUTION MARGIN

163000

217000

Less Fixed (Direct /Indirect) Cost

(54000+55000)

(46000+55000)

NET PROFIT

54000

116000

Contribution Ratio

0.652

0.7

Contribution Ratio = Contribution Margin/ Net sales

Company A = 163000/250000 = 0.652

Company B = 217000/310000 = 0.7

Company B has higher contribution ratio

The table includes all other calculations. May comment for clarification if needed