TASK 1:
A) Contribution margin and operating income calculated in excel.
B)
1) The cost to revenue ratio for each of the four customers as well as the total:
We found the cost of revenue ratio by finding first the cost of revenue. Then we
divided the cost of revenue with Revenues. Then we got the following cost to
revenue ratios seen above. A=94,5%. B=96%, C= 101% D= 98% Total: 98,25%
2) The breakeven sales revenues for the total is 19 190 861. We found that by first
finding the contribution margin ratio. Then we took the fixed cost and divided it by the
contribution margin ratio.
3) The percentage change in sales revenue required to attain the break even point was
found by this formula. ( Breakeven sales – revenues)/revenues… The change in
revenue to break even is 20%. (-)
C)
We started off by ranking the customers by most profitable, to least profitable. Then we
added the cumulative profit for each customer in the same order.
The sea level represents the reported profit of the company.
Task 2:
The ABC system gives us different results than the traditional system. This is because the
overhead costs based on direct labor hours are different in the traditional system compared
