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Home > Business & Careers > Accounting   »   Variable Costs and Contribution Margin analysis

 
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Old Apr 6, 2007, 01:50 AM
Samson500
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Variable Costs and Contribution Margin analysis

Not sure if anyone can help me out with this, but I am trying to work out the variable costs and contribution margin per pot for a company that sells Terracotta pots. I only have the following information:

A manufacturing company sells Terracotta pots for $4-80 each.

The following costs have been determined by the company for the foreseeable future:
Plastic raw material $1.00 per kilo.
Electricity $1.40 per moulding machine hour.
Machine operator labour $14.00 per hour.
Rent on premises $1000.00 per month.
Manager's salary $2500.00 per month.
Transport and distribution $0.40 per pot.

The Terracotta pots require 1.5 kilos of raw meterial each.
The pots can be produced at 14 per moulding machine hour.

The questions are:

Calculate the variable costs per pot, and
What is the contribution margin per pot.

Thanks if anyone can help with this.

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