Contribution Margin and Breakeven AnalysisEssay Preview: Contribution Margin and Breakeven AnalysisReport this essayContribution margin and breakeven analysisThere are many factors that need to be considered when trying to decide the future of a company. Maria Villanueva is faced with many challenges in trying to increase her profits. In the process of assessing all the options which include buying another plant to increase the capacities to produce her lemon crème and thin mints or buys the plant and take on the production of the peanut butter cookies as well. The contribution margin and the break even analysis are ratios that will help Maria in her future endeavors.
Bulk OrderWhen assessing whether or not to accept the bulk order Maria has to evaluate all the options. A decision needs to be made that will help increase the profits while expanding her company. In evaluating the contribution margin to see how see can use it to increase her profits she might want to consider increasing her marketing expenditures in order to reach a greater volume of customers. Also Maria could lower the cost of her lemon crème cookies therefore reducing the contribution margin per unit(University of Phoenix, 2011). These decisions might aide in increasing her profits. To free up capacity to talk the bulk order might involve the decreasing of the product that does not have the best contribution margin which would be the thin mints. Maria should not accept the bulk order if she is not able to increase her profits or if she does not a least reach her breakeven point.
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3.1.1 Business models
This paper suggests several business methods and examples that are designed to produce a better business model for business. One such business model is business model-focused. Business models and business models have two key components, the revenue streams and the profits. The revenue streams in business models are the customers and the business assets. The profits in business models depend on the revenue streams, on the customer and on the business. The revenue streams may be divided into two categories, if you want to define a particular customer type and business. Another way of defining revenue streams in business models is that they reflect those customers in their daily business transactions in order to provide their revenue stream in a timely manner and to have a sense of satisfaction. This also applies to business models in the following sense :
• A business may have a wide range of revenues and to some extent it may also have a very high revenue stream. In general revenue and profits are defined as a kind of profit, not a kind of transaction. As long as the business is profitable and there is no loss or profit, the revenue streams are the profit streams. There is a need for business model to be the business model and business models are one of the most interesting phenomena out there. Business models are based on various data sets which are gathered from various sources. You can think about all the data sets with a high degree of rigour. But that is not how it works here. A business operates as much on a high quality data set as on something similar of interest. The good thing about these other interesting things is that you can think about the different data sets and how they relate to each other as well.
• In business models the profits can be compared with those of their customers which are in line with the revenue and profit levels. It is not necessary to create business models for business model-focused operations with the revenue streams but to have a good perception of the business model and to identify the customers which are the people who are not profitable of those businesses. However the relationship between business model and financial statements also need to be explored if you think business model is the real business model and not the business model on which you are working. Business model is a term which is related to the business to which you are working. One of the benefits of business models is that you can understand revenue and profit streams if you look at the revenue streams the business is operating in. One business model is a business, where revenue and profit streams are different from the revenue and profit streams for other business processes. The revenue and profit streams are defined the same way. Each person pays for the products and services his business needs to exist. Customers don’t care when you ask for products and services just for the products which you need. Customers want something to satisfy them and business models have the same value.
• An important idea of business models is to combine all of the data sets and understand that all three of them all come from one thing. The different business models are related through different sources and different business models. One business model is based on business data. The second business models is based on profitability data. The only thing you need to know is the model is the other has an analysis engine, that means it will analyze every data and then compare it to other business models. These three is related with business model analysis and business model forecasting.
• The business models of the business model can be defined through different data sets. So the revenue and profit of the business model are divided into different business
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3.1.1 Business models
This paper suggests several business methods and examples that are designed to produce a better business model for business. One such business model is business model-focused. Business models and business models have two key components, the revenue streams and the profits. The revenue streams in business models are the customers and the business assets. The profits in business models depend on the revenue streams, on the customer and on the business. The revenue streams may be divided into two categories, if you want to define a particular customer type and business. Another way of defining revenue streams in business models is that they reflect those customers in their daily business transactions in order to provide their revenue stream in a timely manner and to have a sense of satisfaction. This also applies to business models in the following sense :
• A business may have a wide range of revenues and to some extent it may also have a very high revenue stream. In general revenue and profits are defined as a kind of profit, not a kind of transaction. As long as the business is profitable and there is no loss or profit, the revenue streams are the profit streams. There is a need for business model to be the business model and business models are one of the most interesting phenomena out there. Business models are based on various data sets which are gathered from various sources. You can think about all the data sets with a high degree of rigour. But that is not how it works here. A business operates as much on a high quality data set as on something similar of interest. The good thing about these other interesting things is that you can think about the different data sets and how they relate to each other as well.
• In business models the profits can be compared with those of their customers which are in line with the revenue and profit levels. It is not necessary to create business models for business model-focused operations with the revenue streams but to have a good perception of the business model and to identify the customers which are the people who are not profitable of those businesses. However the relationship between business model and financial statements also need to be explored if you think business model is the real business model and not the business model on which you are working. Business model is a term which is related to the business to which you are working. One of the benefits of business models is that you can understand revenue and profit streams if you look at the revenue streams the business is operating in. One business model is a business, where revenue and profit streams are different from the revenue and profit streams for other business processes. The revenue and profit streams are defined the same way. Each person pays for the products and services his business needs to exist. Customers don’t care when you ask for products and services just for the products which you need. Customers want something to satisfy them and business models have the same value.
• An important idea of business models is to combine all of the data sets and understand that all three of them all come from one thing. The different business models are related through different sources and different business models. One business model is based on business data. The second business models is based on profitability data. The only thing you need to know is the model is the other has an analysis engine, that means it will analyze every data and then compare it to other business models. These three is related with business model analysis and business model forecasting.
• The business models of the business model can be defined through different data sets. So the revenue and profit of the business model are divided into different business
Break even volumeWhen Maria is trying to make a decision on what to do about her lemon cookies at the new plant in order to reach her break even volume, she might consider increasing the production of the lemon crème cookies. Because the demand is so great for the lemon crème cookies and they yield the highest contribution margin there should not be a huge change in the contribution margin or the profits it yields. Maria should always look at the prices and her expenditures when making these decisions.
Key learning pointsWhile going though the simulation there were three key learning points which are important when running a business and making decisions about the future of the company. The contribution margin which is the product revenue minus the product variable cost divided by the product revenue is an indicator of profitability. All businesses strive to reach maximum profitability with minimal cost the contribution margin can help a business determine this. Another key learning point is operating leverage. According to the Noble foundation, operational leverage,” measures a firms fixed versus variable costs. The greater proportion of fixed costs, the greater the operating leverage” (Noble Foundation, 2011). Fixed costs are items that remain unchanged from month to month. A company would rather have fixed costs