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3.47 CVP Analysis Carol Mauldin, owner of Mauldin Mercantile Exchange, is considering changing to a sales commission pay scale for her employees. Currently, her 20 salespeople are each paid a flat...

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3.47

  CVP Analysis

Carol Mauldin, owner of Mauldin Mercantile Exchange, is considering changing to a sales commission pay scale for her employees. Currently, her 20 salespeople are each paid a flat salary of $45,000. She believes that by introducing a sales commission on certain products she can increase sales volume and operating income. Carol has provided you with two data files: all sales transactions from the past year and a product list that contains sales price and variable cost for each item sold by the company.

Required (Evaluate each scenario independently and round dollar calculations to 2 decimal places.)

  1. Calculate Mauldin's current contribution margin using the sales data from the most current year. You will find Excel's VLOOKUP function helpful in calculating the contribution margin of each sales transaction.

I was given data set from the professor with sales volume, sales price and variable cost for each product. In order to calculate the total contribution margin, do I need to calculate each product contribution margin first?

Answered 145 days After Dec 01, 2021

Solution

Bhavani answered on Apr 25 2022
103 Votes
Contribution margin
You are not provided excel sheet, so I am not able to know about how the sales data was formatted. Though I was requested to you two times.
However you are asked to calculate cu
ent contribution margin using data.
1st) Explanation.
You have to calculate each sales transaction contribution margin, then add all to get total contribution margin.
Example:
1st May = Number of units sold = 50
sales price per unit =$100 and
variable cost per unit =$40
3nd May = Number of units sold = 10
sales price per unit =$ 70 and
variable cost per unit =$30
1st May
Contribution margin = Sales revenue – Variable cost
$3000 =$5000- $2000
Sales revenue = Sales price per unit * Number of units sold
=$100 * 50 = $5000
Variable cost ...
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