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Running Head: REGRESSION AND CONTRIBUTION MARGIN

Performance Drink ! Manageria" Accoun#ing Ca e

Performance Drink $a%e cer#ain emi!%aria&"e or emi!fi'ed co # i#em in i# income #a#emen# ($ic$ i re)re en#ed &* #o#a" o%er$ead + T$e e #o#a" o%er$ead $a%e &een a""oca#ed in#o %aria&"e and fi'ed co # on #$e &a i of regre ion and corre"a#ion ana"* i + A )er re,uiremen# - of #$e a e men#. #$e "inear e,ua#ion of #o#a" o%er$ead co # and uni# o"d i

re)re en#ed a To#a" o%er$ead co # / 0-123 4 502+166 7 Uni# So"d8+ Here. 0-123 re)re en# fi'ed co #. ($erea 02+166 re)re en# %aria&"e co # )er uni#+ Again. "inear e,ua#ion of #o#a" o%er$ead co # and mac$ine $our u ed i re)re en#ed a To#a" o%er$ead co # / 0923:3 4 506+;<< 7 Mac$ine Hour u ed8+ Here. 0923:3 re)re en# fi'ed co #. ($erea 06+;<< i #$e %aria&"e co # )er mac$ine $our+ T$e mu"#i)"e regre ion are #$e com&ina#ion of #o#a" o%er$ead co # e,ua" #o uni# o"d and mac$ine $our u ed+ Here. #o#a" o%er$ead co # / 0123<2+6< 4 502+-6- 7 Uni#

So"d8 4 506+2<; 7 Mac$ine Hour U ed8+ Here. 0123<2+6< re)re en# fi'ed co #. ($erea 02+-6re)re en# %aria&"e co # )er uni# and 06+2<; re)re en# %aria&"e co # )er mac$ine $our+ =rom #$e a&o%e. re,uiremen# > ana"* i (ou"d #a#e #$a# corre"a#ion ca"cu"a#ed in #$e mu"#i)"e regre ion #a#i #ic )ro%ide #$e &e # re u"# for #o#a" co # e,ua#ion ince i# $a #aken &o#$ #$e %a"ue + Re,uiremen# 6 &e # e #ima#e of #o#a" o%er$ead co # i re)re en#ed a 0123<2+6< 4 502+-6- 7 Uni# So"d8 4 506+2<; 7 Mac$ine Hour U ed8+ T$e con#ri&u#ion income #a#emen# i draf#ed a )er #$e need of re,uiremen# :. and i# ref"ec# con#ri&u#ion margin in #o#a" a (e"" a on #$e &a i of )er uni#+ T$ere are four )roduc# and #$e con#ri&u#ion margin of eac$ )roduc# i differen#. ($ic$ i #$en a"igned #oge#$er #o arri%e a# #$e #o#a" figure + T$e con#ri&u#ion margin for Ba ic )roduc# i 09.93; in #o#a" and 02+2; )er uni#+ T$e con#ri&u#ion margin for H*dra#ion )roduc# i 0-;.->; in #o#a" and 02+>6 )er uni#+ =or In#en i#* )roduc#. #$e con#ri&u#ion margin i 0-6.13- in #o#a" and 02+62 )er uni#+ =or Po # (orkou# )roduc#. #$e con#ri&u#ion margin i 0-6.3:; in #o#a" and 02+>6 )er uni#+ T$e #o#a" of a""

#$e )roduc# a"e and %aria&"e co # ca"cu"a#e #$a# #o#a" con#ri&u#ion margin i 016.-21 in #o#a" and 02+-< )er uni#. ($erea o)era#ing )rofi# i 0>.:-:+3- in #o#a" and 02+2- )er uni#+ T$e o"u#ion of re,uiremen# 1 ref"ec# #$e &reake%en )oin# ($ere re%enue of #$e organi?a#ion e,ua" i# co # . and #$e com)an* doe no# &ear an* "o a# #$a# )oin#+ Here. #$e

Breake%en )oin# in uni# i >. 39.2-: uni# and Breake%en )oin# in a"e do""ar i 06;9.-3<+:3+ Targe#ed Profi# re,uiremen# i 012.222. and #$e #arge#ed uni# re,uired #o &e o"d i 162.6<uni# + Margin of Safe#* i a"e a&o%e #$e &reake%en "e%e" and i# i 0>1.2;2+1:+ Re,uiremen# 3

ref"ec# #$a# #$e com)an* $a a )ecia" order of making 32.222 uni# and #$e differen#ia" ana"* i com)"e#ed in #$e o"u#ion ref"ec# #$a# con idering a"" #$e e'i #ing and e'#ra co # #$e order (ou"d *ie"d an incremen#a" )rofi# of 0122+ T$erefore. com)an* $ou"d go a$ead and acce)# #$e order+ Re,uiremen# 9 re,uire ana"*?ing ($e#$er in%e #men# in a ne( )iece of e,ui)men# (ou"d &e or (ou"d no# &e )rofi#a&"e for #$e com)an*+ T$e ana"* i ref"ec# #$a# #$e com)an* $a a ne# )re en# %a"ue of 0;6;+21 for #$i )ro@ec#. ($erea #$e in#erna" ra#e of re#urn i 1+-:A for #$i )ro@ec#+ T$e recommenda#ion on #$e &a i of ana"* i i #$a# managemen# $ou"d acce)# #$e )ro@ec# ince ne# )re en# %a"ue i )o i#i%e and #$e in#erna" ra#e of re#urn i $ig$er #$an #$e di coun# ra#e+