Eliminating sales commissions would yield Hallstead Jewelers a net income of $130,000 rather than a net loss of $406,000. The contribution margin is the difference between sales and cost of goods sold; therefore, yields $5,141,000.  In analyzing the effects of removing the expenses of sales commissions, the contribution margin ratio needs to be calculated. The ratio is as follows:  The ratio with, and without, commissions is:  In further analyzing what effect sales commissions have on this scenario, a break-even analysis is the next calculation to determine. The break-even analysis is as follows:
For the last thirty years, Cracker Barrel Old Country Store, Inc. has been offering people on the highways of America an alternative to the fast food pit stop. Their restaurants serves home-style food, has quality gift shops and, most of all, a friendly and accommodating environment all go in to create a welcoming atmosphere. Making the guest comfortable is what makes them different. The waiters and waitresses let you take your time. You are seated and promptly drink orders are taken. They give the customer sufficient time to gaze over the menu. There are peg games on the table to occupy you or your young ones. If it is a game of checkers you wish, there is always a table in the corner ready to play.
Table C projects the break even analysis in both units and dollars as a basis for further projections. As seen in Table C substantially larger sales are required to break even.
The contribution margin of the Amsterdam Seasonals is lower than other brands, is 48.94 per cent. (Price is 4.25, Variable cost is 2.17. CM is (4.25-2.17)/4.25=48.94%)
There are two solutions that provide the optimal profit given the current constraints under which JP Molasses operates. Under these conditions, the optimal profit is $63,571. This profit margin is achieved in both cases with revenue of $942,354 and cost of $412,333 for material purchased and $466,450 for fixed and variable costs in processing, for total cost of $878,783.
Lowe’s Companies, Inc. is the fourteenth largest retailer in America, and overall the world’s second largest home improvement retailer. They are the 108th ranked corporation on the Fortune 500 top corporations list. With an impressive in store stock of 40,000 home improvement items on hand, ranging from lumber to Home décor items, plus an additional 400,000 home improvement items available through a special order program. Lowe’s provides a onetime stop for all home improvement needs, for both the Do-It-Yourselfer, and the ever-expanding market of the Commercial Business Customer.
At nine fifteen there was a sales meeting, sales associates meet to discuss sales calls and sales revenue. Associates talk about different venues to sell to, states commission and also talk about different companies and corporation they sell to or try to sell to. Each sales associate spends about three to four minutes each discussing sales about previous week, commissions ranging from $40.00 to $8000.00.
As competition intensifies and pressure from retailers to get better margins increases, Clique Pens’ margins have dropped 6% in the past 3 years. Trade deals for retailers are the main reason our margins have steadily shrunk and our customers are not getting the benefits. Market development funds (MDF) are the key to bring our margins back up, while keeping retailers happy and their margins intact, we can increase our profit margins by 3%, to 2011 levels, while giving our customers a better deal.
To determine if Lille Tissages, S.A. should lower the price to FF15.00/m or not we need to consider the Variable costs and the Contribution margin associated with Item 345.
From a P&L standpoint, a dollar saved in vendor cost is reflected as a dollar increase in profit (and cash on hand) where as a dollar increase in sales is only marginally reflected in profit once you subtract operating cost:
In 2008, Jane Whitler had opened a high-end used furniture retail store in a metropolitan area in the Southwest United States. Her business has been flourishing due to the increasing aging population in the United States. A major part of her market segmentation is snowbirds (people who travel south during winter from colder states). She is able to buy their used furniture at a reasonable price as they move to different houses, or if they move to care facility. The retired market is also her target market for selling her furniture. This is because as the retired people are moving from their homes in the north to their homes in the south permanently, they tend to buy their furniture from her store. By the end of 20ll, Jane was pleased with her sales, as they approached close to $2 million. However, has she looked back her records, she couldn’t figure out how she was still losing money. In 2009, she lost 68,000, in 2010 the loss was $31,000, and in 2011 it was down to $20,000. She determined that 2012 would be profitable, but sales began to plateau.
[6] Colin Drury, Management and Costing Accounting, (7th edition), Chapter 8, Cost-volume-profit analysis, p. 165-173
To breakeven, we would have to sell 267,857 units. We plan on selling the Galaxy Note 8 at a price of $499 which is cheaper than our previous phones in the Galaxy Note line. Consumers aren’t going to purchase a new smartphone if the price is going to be in the same range of the Galaxy Note 7. So we are going to be selling the smartphone at a discount. We are using odd-even pricing for the Samsung Galaxy Note 8. It gives a sense to the consumer that they will be purchasing the Samsung Galaxy Note 8 at a bargain, instead of using the even pricing method. The cost to make the smartphone itself is around $275. There will be a picture below that will explain the details of the build of the smart phone. For the breakeven I subtracted the Total Cost from the Total Revenue. The profit for year 1 will be $1 billion dollars, I subtracted the total revenue for year 1, which was $1.06 billion and subtracted that number by the fixed cost amount of $60
Cosmo-cosmetics Co. uses $0.246 out of every sale dollar to cover variable expenses, leaving $0.753 as a contribution margin to cover fixed costs and make a profit. (Note: 75.3% is the contribution margin as a percentage of sales)
In this scheme, current Sales data will be compared with the Previous Sales data and discount will be given on the basis of growth percentage
Furthermore cost of sales is the cost that goes into producing a product. The cost of sales line appears near the top of the profit and loss income statement as it is a subtraction from the businesses net sales. The formula for this is beginning inventory + inventory purchases and expenses - ending inventory = cost of sales.