Report to the management of Mendel Paper Company
Contribution margin analysis At the initial estimates, all the four product lines will have a positive contribution margin. Material costs constitute a larger percentage of the total variable cost for each of the four product lines. Variable overhead cost is allocated on the basis of the number of hours. Given the information on the number of units produced per hour, computer line will have a variable overhead cost of $1.50 per unit. The variable cost per unit for Napkins, Placemats and Poster board will be $0.60, $2.40 and $0.50 respectively. The computer line has the highest contribution margin while Continue reading...