The expenses to explain the difference between 43 percent and 29 percent.

Question

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Answer 1

Question

Chapter 11, Problem 1E

a)

To determine

To describe: The expenses to explain the difference between 43 percent and 29 percent.

a)

Expert Solution

Answer to Problem 1E

Both Gross margins and contribution margins are not same and also both of them caused by the fixed cost.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

The department store-brand pantyhose sell the gross margin of 43 percent and a contribution margin of 29 percent. There is some difference in the 43 percent(Gross Margin) and 29 percent(Contribution Margin).Gross Margins are not same as the contribution margins. Difference between two has been caused by the fixed cost. Gross Margins are calculated by subtracting the fixed cost and variable costs.

Economics Concept Introduction

Introduction: Gross margin defined as the company’s net amount of sales revenue minus its cost of goods sold.it is the direct costs associated with the producing the goods to be sells and service to be provide.

b)

To determine

To calculate: The percentage change in unit sales is required to increase total contributions if price is cut by 10 percent.

b)

Expert Solution

Answer to Problem 1E

0.53 Or 53% change in sale is required to increase the contribution margins.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Following is the formula:

=Contribution Margin PercentageContribution Margin Percentage−Change in Price

=29%29%−10%

=0.290.19

=1.53

Economics Concept Introduction

Introduction: A Unit sale is truly what the customer buys from us. It is the quantity of product or service. The unit of sale is basically the fundamental building block of our business.

c)

To determine

To compare: The store-brand pantyhose with the products in the given the table and also evaluate the Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

c)

Expert Solution

Answer to Problem 1E

Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Expenditures on capital cost, selling price, overhead cost, and advertisement are higher for Whitman’s candy.

Further, Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Economics Concept Introduction

Introduction: Contribution margin referred as selling price minus variable cost, which is measure of the ability of a company to cover variable costs with revenue.

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Answer 2

Question

Chapter 11, Problem 1E

a)

To determine

To describe: The expenses to explain the difference between 43 percent and 29 percent.

a)

Expert Solution

Answer to Problem 1E

Both Gross margins and contribution margins are not same and also both of them caused by the fixed cost.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

The department store-brand pantyhose sell the gross margin of 43 percent and a contribution margin of 29 percent. There is some difference in the 43 percent(Gross Margin) and 29 percent(Contribution Margin).Gross Margins are not same as the contribution margins. Difference between two has been caused by the fixed cost. Gross Margins are calculated by subtracting the fixed cost and variable costs.

Economics Concept Introduction

Introduction: Gross margin defined as the company’s net amount of sales revenue minus its cost of goods sold.it is the direct costs associated with the producing the goods to be sells and service to be provide.

b)

To determine

To calculate: The percentage change in unit sales is required to increase total contributions if price is cut by 10 percent.

b)

Expert Solution

Answer to Problem 1E

0.53 Or 53% change in sale is required to increase the contribution margins.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Following is the formula:

=Contribution Margin PercentageContribution Margin Percentage−Change in Price

=29%29%−10%

=0.290.19

=1.53

Economics Concept Introduction

Introduction: A Unit sale is truly what the customer buys from us. It is the quantity of product or service. The unit of sale is basically the fundamental building block of our business.

c)

To determine

To compare: The store-brand pantyhose with the products in the given the table and also evaluate the Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

c)

Expert Solution

Answer to Problem 1E

Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Expenditures on capital cost, selling price, overhead cost, and advertisement are higher for Whitman’s candy.

Further, Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Economics Concept Introduction

Introduction: Contribution margin referred as selling price minus variable cost, which is measure of the ability of a company to cover variable costs with revenue.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 11, Problem 1E

a)

To determine

To describe: The expenses to explain the difference between 43 percent and 29 percent.

a)

Expert Solution

Answer to Problem 1E

Both Gross margins and contribution margins are not same and also both of them caused by the fixed cost.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

The department store-brand pantyhose sell the gross margin of 43 percent and a contribution margin of 29 percent. There is some difference in the 43 percent(Gross Margin) and 29 percent(Contribution Margin).Gross Margins are not same as the contribution margins. Difference between two has been caused by the fixed cost. Gross Margins are calculated by subtracting the fixed cost and variable costs.

Economics Concept Introduction

Introduction: Gross margin defined as the company’s net amount of sales revenue minus its cost of goods sold.it is the direct costs associated with the producing the goods to be sells and service to be provide.

b)

To determine

To calculate: The percentage change in unit sales is required to increase total contributions if price is cut by 10 percent.

b)

Expert Solution

Answer to Problem 1E

0.53 Or 53% change in sale is required to increase the contribution margins.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Following is the formula:

=Contribution Margin PercentageContribution Margin Percentage−Change in Price

=29%29%−10%

=0.290.19

=1.53

Economics Concept Introduction

Introduction: A Unit sale is truly what the customer buys from us. It is the quantity of product or service. The unit of sale is basically the fundamental building block of our business.

c)

To determine

To compare: The store-brand pantyhose with the products in the given the table and also evaluate the Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

c)

Expert Solution

Answer to Problem 1E

Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Expenditures on capital cost, selling price, overhead cost, and advertisement are higher for Whitman’s candy.

Further, Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Economics Concept Introduction

Introduction: Contribution margin referred as selling price minus variable cost, which is measure of the ability of a company to cover variable costs with revenue.

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Answer 4

Question

Chapter 11, Problem 1E

a)

To determine

To describe: The expenses to explain the difference between 43 percent and 29 percent.

a)

Expert Solution

Answer to Problem 1E

Both Gross margins and contribution margins are not same and also both of them caused by the fixed cost.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

The department store-brand pantyhose sell the gross margin of 43 percent and a contribution margin of 29 percent. There is some difference in the 43 percent(Gross Margin) and 29 percent(Contribution Margin).Gross Margins are not same as the contribution margins. Difference between two has been caused by the fixed cost. Gross Margins are calculated by subtracting the fixed cost and variable costs.

Economics Concept Introduction

Introduction: Gross margin defined as the company’s net amount of sales revenue minus its cost of goods sold.it is the direct costs associated with the producing the goods to be sells and service to be provide.

b)

To determine

To calculate: The percentage change in unit sales is required to increase total contributions if price is cut by 10 percent.

b)

Expert Solution

Answer to Problem 1E

0.53 Or 53% change in sale is required to increase the contribution margins.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Following is the formula:

=Contribution Margin PercentageContribution Margin Percentage−Change in Price

=29%29%−10%

=0.290.19

=1.53

Economics Concept Introduction

Introduction: A Unit sale is truly what the customer buys from us. It is the quantity of product or service. The unit of sale is basically the fundamental building block of our business.

c)

To determine

To compare: The store-brand pantyhose with the products in the given the table and also evaluate the Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

c)

Expert Solution

Answer to Problem 1E

Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Expenditures on capital cost, selling price, overhead cost, and advertisement are higher for Whitman’s candy.

Further, Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Economics Concept Introduction

Introduction: Contribution margin referred as selling price minus variable cost, which is measure of the ability of a company to cover variable costs with revenue.

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Answer 5

Chapter 11, Problem 1E

a)

To determine

To describe: The expenses to explain the difference between 43 percent and 29 percent.

a)

Expert Solution

Answer to Problem 1E

Both Gross margins and contribution margins are not same and also both of them caused by the fixed cost.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

The department store-brand pantyhose sell the gross margin of 43 percent and a contribution margin of 29 percent. There is some difference in the 43 percent(Gross Margin) and 29 percent(Contribution Margin).Gross Margins are not same as the contribution margins. Difference between two has been caused by the fixed cost. Gross Margins are calculated by subtracting the fixed cost and variable costs.

Economics Concept Introduction

Introduction: Gross margin defined as the company’s net amount of sales revenue minus its cost of goods sold.it is the direct costs associated with the producing the goods to be sells and service to be provide.

b)

To determine

To calculate: The percentage change in unit sales is required to increase total contributions if price is cut by 10 percent.

b)

Expert Solution

Answer to Problem 1E

0.53 Or 53% change in sale is required to increase the contribution margins.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Following is the formula:

=Contribution Margin PercentageContribution Margin Percentage−Change in Price

=29%29%−10%

=0.290.19

=1.53

Economics Concept Introduction

Introduction: A Unit sale is truly what the customer buys from us. It is the quantity of product or service. The unit of sale is basically the fundamental building block of our business.

c)

To determine

To compare: The store-brand pantyhose with the products in the given the table and also evaluate the Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

c)

Expert Solution

Answer to Problem 1E

Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Expenditures on capital cost, selling price, overhead cost, and advertisement are higher for Whitman’s candy.

Further, Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Economics Concept Introduction

Introduction: Contribution margin referred as selling price minus variable cost, which is measure of the ability of a company to cover variable costs with revenue.

Answer 6

Chapter 11, Problem 1E

a)

To determine

To describe: The expenses to explain the difference between 43 percent and 29 percent.

a)

Expert Solution

Answer to Problem 1E

Both Gross margins and contribution margins are not same and also both of them caused by the fixed cost.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

The department store-brand pantyhose sell the gross margin of 43 percent and a contribution margin of 29 percent. There is some difference in the 43 percent(Gross Margin) and 29 percent(Contribution Margin).Gross Margins are not same as the contribution margins. Difference between two has been caused by the fixed cost. Gross Margins are calculated by subtracting the fixed cost and variable costs.

Economics Concept Introduction

Introduction: Gross margin defined as the company’s net amount of sales revenue minus its cost of goods sold.it is the direct costs associated with the producing the goods to be sells and service to be provide.

Answer 7

Chapter 11, Problem 1E

a)

To determine

To describe: The expenses to explain the difference between 43 percent and 29 percent.

Answer 8

a)

Expert Solution

Answer to Problem 1E

Both Gross margins and contribution margins are not same and also both of them caused by the fixed cost.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

The department store-brand pantyhose sell the gross margin of 43 percent and a contribution margin of 29 percent. There is some difference in the 43 percent(Gross Margin) and 29 percent(Contribution Margin).Gross Margins are not same as the contribution margins. Difference between two has been caused by the fixed cost. Gross Margins are calculated by subtracting the fixed cost and variable costs.

Answer 13

Economics Concept Introduction

Introduction: Gross margin defined as the company’s net amount of sales revenue minus its cost of goods sold.it is the direct costs associated with the producing the goods to be sells and service to be provide.

Answer 14

b)

To determine

To calculate: The percentage change in unit sales is required to increase total contributions if price is cut by 10 percent.

b)

Expert Solution

Answer to Problem 1E

0.53 Or 53% change in sale is required to increase the contribution margins.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Following is the formula:

=Contribution Margin PercentageContribution Margin Percentage−Change in Price

=29%29%−10%

=0.290.19

=1.53

Economics Concept Introduction

Introduction: A Unit sale is truly what the customer buys from us. It is the quantity of product or service. The unit of sale is basically the fundamental building block of our business.

Answer 15

b)

To determine

To calculate: The percentage change in unit sales is required to increase total contributions if price is cut by 10 percent.

Answer 16

b)

Expert Solution

Answer to Problem 1E

0.53 Or 53% change in sale is required to increase the contribution margins.

Answer 17

b)

Expert Solution

Answer 18

b)

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Following is the formula:

=Contribution Margin PercentageContribution Margin Percentage−Change in Price

=29%29%−10%

=0.290.19

=1.53

Answer 21

Economics Concept Introduction

Introduction: A Unit sale is truly what the customer buys from us. It is the quantity of product or service. The unit of sale is basically the fundamental building block of our business.

Answer 22

c)

To determine

To compare: The store-brand pantyhose with the products in the given the table and also evaluate the Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

c)

Expert Solution

Answer to Problem 1E

Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Expenditures on capital cost, selling price, overhead cost, and advertisement are higher for Whitman’s candy.

Further, Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Economics Concept Introduction

Introduction: Contribution margin referred as selling price minus variable cost, which is measure of the ability of a company to cover variable costs with revenue.

Answer 23

c)

To determine

To compare: The store-brand pantyhose with the products in the given the table and also evaluate the Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Answer 24

c)

Expert Solution

Answer to Problem 1E

Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Answer 25

c)

Expert Solution

Answer 26

c)

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

Given:

Consumer packaged goods scanner checkout counters are 32,000

Panel surveys for the households are 70,000

Gross margin is 43 percent

Contribution margin is 29 percent and inventory turns over 14 times per year.

QUANTITY SOLD	UNIFORM PRICE	TOTAL REVENUE	MARGINAL REVENUE	VARIABLE COST	UNIT OPERATING PROFIT	CUMULATIVE PROFIT
0	$50.00	$0.00	$0.00	$28.00	$0.00	$0.00
1	$48.00	$48.00	$48.00	$28.00	$20.00	$20.00
2	$46.00	$92.00	$44.00	$28.00	$16.00	$36.00
3	$45.00	$135.00	$43.00	$28.00	$15.00	$51.00
4	$44.00	$176.00	$41.00	$28.00	$13.00	$64.00
5	$42.00	$210.00	$34.00	$28.00	$6.00	$70.00
6	$40.00	$240.00	$30.00	$28.00	$2.00	$72.00
7	$38.31	$268.17	$28.00	$28.00	$0.00	$72.00
8	$36.50	$292.00	$24.00	$28.00	($4.00)	$68.00
9	$34.50	$311.00	$19.00	$28.00	($9.00)	$59.00
10	$32.70	$327.00	$16.00	$28.00	($12.00)	$47.00
11	$30.91	$340.00	$13.00	$28.00	($15.00)	$32.00
12	$29.17	$350.00	$10.00	$28.00	($18.00)	$14.00
13	$27.46	$357.00	$7.00	$28.00	($21.00)	($15.00)
14	$25.79	$361.00	$4.00	$28.00	($24.00)	($39.00)
15	$24.07	$361.00	$0.00	$28.00	($28.00)	($67.00)
16	$22.50	$360.00	($1.00)	$28.00	($29.00)	($96.00)
17	$20.82	$354.00	($4.00)	$28.00	($32.00)	($128.00)
18	$19.28	$347.00	($7.00)	$28.00	($35.00)	($163.00)

Explain:

Whitman’s sampler sell for a contribution margin 0f 54 percent when pantyhose sell foe 29 percent.

Expenditures on capital cost, selling price, overhead cost, and advertisement are higher for Whitman’s candy.

Further, Inventory is much less for the Whitman’s candy and leads to the high contribution margin.

Answer 29

Economics Concept Introduction

Introduction: Contribution margin referred as selling price minus variable cost, which is measure of the ability of a company to cover variable costs with revenue.