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Acc/531 Week 2 Regression Analysis Paper

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3. Compare the financial results from Question 1 and 2 and highlight your observation regarding contribution. Based on your calculations, what is the relationship between volume and cost?

Regarding our observation of contribution, we can see the significant change having a variable cost of $1,725( base case) and $1,625(revised freight cost). The contribution margin of the trans-load jump from 25 %, without review, to 50% after revised freight cost. If your company has a low contribution margin, it is more difficult to cover your fixed costs and earn income. One option for improving your margins is reducing costs. You can negotiate with contractors to slim resources or acquisition costs, cut labor or reduce wasted resources. Moreover, the time of paying back under the revised freight cost is less than the base case time. …show more content…

It is when a company recuperates it expensive before earning a profit. In both cases, the trans-load is working above the break-even.
According to the calculation, increasing volume at the same expensive cost will increase profit. Nonetheless, revising the freight cost and reducing its variable cost to 6% per container (1,625) from the base case (1,725), will affect the company profit positively. For example, with 10,000 containers(phase 1), the company earned a profit of $40,000/year, and with 60,000 containers(phase 3), the gain is $5,040,000 regarding the base case. After the 6% off in the variable cost, the firm could make a 3.85% phase1, 34,2% phase 2, 45,65% phase 3 of increase in its

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