Bus 630 Assignment Wk 1

Mendel Paper Company (Case 2B)

Anthony R Blanks Jr.

Ashford BUS 630 (NAH1450A)

Moustafa Ahmed

12/15 /2014

Mendel Paper Company (Case 2B)

From all original estimates given, prepare estimated contribution margins by product line for the next fiscal quarter. Also, show the contribution margins per unit.

In order to estimate Mendel’s contribution margins by product line; I will need to use the direct contribution margin concept. The direct contribution margin concept calculates sales less product-line cost of sales, product line advertising costs, and any other costs traceable to that product line. The product line's direct contribution margin is the revenue remaining to pay for company common costs and to earn company profits (Schneider, 2012). The spreadsheet shown below will contain the contribution margins for each of Mendel’s product lines.

Mendel Prod Line | Est. Sale Vol | Selling Price | Material Cost/Var | Contribution Margin/Per Unit | Contribution Margin/ Ratio |

Computer Paper | 30,000 | $14 | $6 | $8 | 240,000/420,000 = 57% = Ratio |

  |   |   |   |   | 8.00*30,000 = $240,000 = Cost Mar |

Napkins | 120,000 | $7 | $4.50 | $2.50 | 300,000/840,000 = 36% = Ratio |

  |   |   |   |   | 2.50*120,000 = $300,000 = Cost Mar |

Place Mats | 45,000 | $12 | $3.60 | $8.40 | 378,000/540,000 = 70% = Ratio |

  |   |   |   |   | 8.40*45,000 = $378,000 = Cost Mar |

Post Board | 80,000 | $8.50 | $2.50 | $6.00 | 480,000/680,000 = 71% = Ratio |

  |   |   |   |   | 6.00*80,000 = $480,000 = Cost Mar |

Totals | 275,000 |   |   |   |   |

Prepare contribution margins as in part (1) with all revisions included

Based upon the communicated changes that were relayed via Mendel’s Vice President of purchasing, the material cost of computer stock has risen to $7.00 and the cost of place mats increased $0.40 to $4.00. Also there is a revision to the original computer stock order which has been confirmed at 35,000 units (Schneider, 2012)....