Mendel Paper Company

Mendel Paper Company

July 19, 2013

Your Name

BUS 630 Managerial Accounting

Thomas Badley

The purpose of this paper is to assess the profit margins and conduct a Cost-Volume-Profit analysis of Mendel Paper Company. Additionally, different proposals will be made as far as increasing revenue through volume while addressing certain issues faced by Mendel Paper Company. This will involve current figures as well as proposed figures by a supervisor at the plant and various management staff. The prime directive is to determine the profitability of the operations and whether this can be maintained.

Four products are offered by Mendel Paper Company. They include computer paper, napkins, place mats, and poster board. The estimate is currently in for the next fiscal quarter. The plant superintendent, Marlene Herbert, is concerned about the rising fixed cost of production in their place mat operation. Figure 1 provides an overview of Mendel Paper Company’s variable overhead and contribution margin per product unit and sales with a $420,000 fixed plant overhead and $118,000 in quarterly administrative expenses.

275,000 | Computer Paper | Napkins | Place Mats | Poster Board |

Estimated Sales | | | | |

Volume in Units | 30,000 | 120,000 | 45,000 | 80,000 |

Selling Prices | $14.00 | $7.00 | $12.00 | $8.50 |

Material Costs | $6.00 | $4.50 | $3.60 | $2.50 |

Percent of sales | 0.11 | 0.44 | 0.16 | 0.29 |

Units Per Hour | 6 | 10 | 5 | 4 |

Variable Overhead hr | $9.00 | $6.00 | $12.00 | $8.00 |

Overhead per unit | $1.50 | $0.60 | $2.40 | $2.00 |

Quarterly Fixed OH | $420,000 | $420,000 | $420,000 | $420,000 |

selling and admin exp. | $118,000 | $118,000 | $118,000 | $118,000 |

Quarterly Fixed per product | $45,818 | $183,273 | $68,727 | $122,182 |

selling/admin per product | $12,873 | $51,491 | $19,309 | $34,327 |

Contribution Margin | $12.50 | $6.40 | $9.60 | $6.50 |

Break Even | 3665.5 | 28636.4 | 7159.1 | 18797.2 |

Revenue |...