Breakeven Contributions

Contribution Margin and Breakeven Analysis
Graciela Polanco, Juan Carlos Rivera, Viviana Alicea and Wilmarie Laboy
University of Phoenix
Accounting for Managerial Decision ACCO/529
Prof. IsabelRosa
September 15, 2007









Contribution Margin and Breakeven Analysis
Contribution of margin is a difference between revenues and variable expenses, this mean that the amount is acontribution to fixed expenses and operating systems from you go out of products in this case the sale of cookies. After analyze several alternatives, the investigator find that the contribution marginaccording to our profit, will have to incur to do certain adjustments to inside the operation of the company. The margin of contribution is an indicator for Maria, which will her use as guide to takethe decision of which what is the size of the order.
Between these changes the distribution expenses has to increase. This will help to expand and gain more markets. An approach will be done moredirectly to the cookies of mint, in order that the contribution margin still had the level provided by the lemon cookies. Realizing the above mentioned adjustments the contribution margin will notincrease, this is a serious indicator for not ordering a serious suggested size. This is a good decision for the operation and the income of the company.
To buy the peanut butter cookie plant was theright decision. The new plant is going to give the opportunity to meet the actual demand of lemon crème cookies, plus may open door other or higher markets. After the acquisition, the company has acontribution margin of 480 and unit contribution margin of .80. The near-term demand for the lemon cream cookies exceeded current capacity by 600,000 packs. Maybe María would encounter that in the newplant the breakeven volume would be 650,000. To make peanut butter cookies is not profitable, so is not an option. The recommendations are the fallowing: to invest in more advertising and gain more...