Gacad, Mallet S.

BSMA 3B (3134)

Problem 1
Elimination of the Barbie mustang
Sales revenue - 150,000.00
Less:
Avoidable variable cost 100,000.00
Avoidable direct fixed cost 40,000.00
Segment margin - 10,000.00

Effect on Dora Jeep (increase by 10%)

Increase sales (350k*10%) 35,000.00
Less: Increase variable cost (140k*10%) 14,000.00
Increased contribution margin 21,000.00

Net effect of elliminating the Barbie mustang 11,000.00

Eliminating the Barbie mustang will result to net effect of $11,000.

Problem 2
Matchbox How wheels
Unit contribution margin 3.00 8.00
Machine time required (minutes per unit) 6.00 10.00
Contribution margin per minute of machine time 0.50 0.80

1 2
Hotwheels Remote control
Contribution margin per minute of machine time 0.80 0.75

Units produced 10,000.00 10,000.00

Machine time required (min. per unit) 10.00 20.00
Total machine requirements (minutes) 100,000.00 200,000.00
4.Total contribution margin generated 80,000.00 150,000.00
 Wrangler Dora Jeep
Sales Revenue 500,000.00 385,000.00
Less: Variable cost 200,000.00 154,000.00
Contribution Margin 300,000.00 231,000.00
Less: Direct Fixed Cost 50,000.00 30,000.00
Segment Margin 250,000.00 201,000.00
Less: Common Fixed Cost 113,000.00 87,000.00
Net Operating Income 137,000.00 114,000.00

Net Operating income without the Barbie Mustang is estimated to be $251,000, compared to $240,000 with it.

Remote control
15.00 *$15(highest unit contribution margin)
20.00 *$0.80(Highest unit contribution margin per minute of machine time.)
0.75

3
Match box
0.50

5,000.00 (units)
6.00 (minutes)
30,000.00 (remaining)
15,000.00
 (350,000%*110%)
(140,000%*110%)
(210,000%*110%)

ompared to $240,000 with it.