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Margin Analysis

Being able to calculate a healthy Margin Analysis will help the Research & Development Department understand how to change the cost of material and the Production Department understand how to change the cost of labor.

You will need:

• The Production Analysis report (page 4) of the Capstone Courier for Round 0
• The Segment Analysis reports (pages 5-9) of the Capstone Courier for Round 0

Determining Current Margin

* The product details are for example only. Your product names and data may differ, but the process to calculate margins is identical.

Useful formulas:
Contribution Margin($) = Price – (Material Cost + Labor Cost)
Margin Percentage (%) = Contribution Margin/Price

Calculating Margin Activity

In the table below enter each product’s price, material cost, and labor cost found in your report, and note whether or not a second shift was used (Y/N). Then, use the values you entered to calculate the Contribution Margin and the Margin Percentage.

Incomplete

Current Margin
Product	Name	Price	Material Cost	Labor Cost	Second Shift (Y/N)	Contribution Margin ($)	Contribution Margin (%)
Traditional
Low End
High End
Performance
Size

The Round 0 Capstone Courier