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Contribution Margin & Measuring the Profitability of A Commodity Discussion
Week 1’s company is VFCorporation
The company I am choosing for this week 1 discussion is VF Corporation. VF was founded in October 1899; the company is first established in Pennsylvania as the Reading Glove and Mitten Manufacturing Company by John Barbey and a group of investors and is Headquarters in Greensboro North Carolina. VF is an American worldwide apparel and footwear company with brands including Timberland, Vans, Dickies and many more. The company’s more than 30 brands are organized into four categories: Outdoor, Active, Work, and Jeans. The company’s revenue averages 13.8 billion annually. VF Corporation relies on managerial accounting due to planning budgets, Marketing and Overhead cost. They also must make decisions on selling products, directing and motivating almost 70,000 employees, controlling their plans and Performance Evaluation to run the company.
1.Product Profitability
This week we covered Chapter 5, Cost-Volume-Profit Analysis and Chapter 6, Variable Costing for Management Analysis. Cost-Volume-Profit Analysis is about formulas and ratios used to determine the profitability of individual products and/or operations. Variable Costing is a way to calculate profitability of a firm’s operations by either calculating the contribution margin or gross profit. Still using the company from your Week 1, please discuss how the contribution margin might be used to determine the profitability of that product and how it’s used to make the operations more profitable.
Please make an initial post and two replies to either your classmates or professor. The initial post must be at least 250 words with one external reference in APA format, while your replies must be at least 100 words.
View your discussion rubric.
Isaiah Frazier
Week 3
The contribution margin is the leftover amount of money after you have covered the costs of running your business. It tells you how much you made at the end of production. Calculations in a business are very important and when you put contribution margin into the equation it makes their work easier because it will give them an idea of how their business is running. The contribution margin helps companies tell if their business is sustainable.
The Contribution margin is looked at every day around the world in large stores such as Walmart. Walmart sells thousands of items in their facilities every day, however, it would not mean much if it did not return a profit for the store owner. The leftover money can be used for making buying new equipment or even saved up to build a new store. According to Vercio (2017), an example of a Contribution margin is an Owner-Operator Truck Driver that needs to make sure he has money to save up for the future and keep the maintenance of his machines and operating properly so his operations will not be disrupted. Walmart must make sure the machines their employees use to push carts, create recipes, retrieve boxes on high shelves, and punch into work function flawlessly so their business can continue to flourish and the calculations that spawn from their hard work Are calculated properly.
Contribution margin is important to business in a way that makes sure the company is making a profit from their business ventures. With the money businesses make they can open stores that can help them make more money in the future.
References:
Vercio, A. (2017). Contribution Margin and Fixed Cost per Unit: When to Use and When Not to Use These Analytical Tools. Journal of Corporate Accounting & Finance (Wiley), 28(2), 90–93. https://doi.org/10.1002/jcaf.22244
The Finance Storyteller (2019) Contribution Margin explained https://www.youtube.com/watch?v=CN7dJSmnWAM
Week 3 Discussion
COLLAPSE
US Xpress would most likely use variable costing for the fuel usage. The trucking industry relies alot of their profit on fuel cost to maintain a profit. If the cost of fuel rises, then the expenses for the company will rise. Therefore, the cost that would need to be charged to the customers would rise to compensate for the change. Using the cost of the previous year and the average fuel cost for the different terms could help to calculate the costs for the current year. For example, if 100,000 gallons of fuel was used for the previous year at $2.34 a gallon and prices rose to $2.54 a gallon. It would be safe to raise expected costs by 20 cents per gallon to make up the difference in earnings.
This week we covered Chapter 7, Budgeting and Chapter 8, Evaluating Variances from Standard Costs. Budgeting is used to project revenue and costs into the future, typically twelve months. Evaluating variances from standard costs is the process of evaluating performances against benchmarks serving as goals. From the company you used in Week 1, please speculate how benchmarks can be determined when evaluating variances from standard costs. Provide detailed examples and how you arrived at those examples.
Please make an initial post and two replies to either your classmates or professor. The initial post must be at least 75 – 150 words with one external reference in APA format, while your replies must be at least 100 words.
View your discussion rubric.
Eric Shepard
Week 4 Discussion
Good morning everyone. When it comes to Benchmarks these are standards that are being established in advance so that employees are aware of what is expected from them by the company. So when we talk about Advanceauto INC. the benchmarks are determined by how much product is sold and the customer satisfaction base. Because Autozone INC. is a retail based business employees are evaluated on how knowledgeble they are of the products being sold and if they can provide customers with a high level of customer service when it comes to them buying products that are best suitable for whatever task they are attempting to complete.
Mary Sensing
Week 4
Benchmarking is a standard a company will use to measure different costs, where it could be variable cost and fixed costs. In the company I used, which is Ford Motors, a variable cost would be fuel and electricity it uses to run the plant they use to produce the cars and trucks. Then the fixed costs would be the rent of the building, salary of the employees, or the depreciation of the vehicles that aren’t sold on the lot. After Ford sets its benchmark, then they can see the different of the standard cost and what the actual cost are so that they can start to find out the variances, direct materials used, direct labor, and variable manufacturing of the overhead costs.
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3.Lean Manufacturing and Customer Demand This week we covered Chapter 11, Capital Investment Analysis and Chapter 12, Lean Manufacturing and Activity Analysis. Capital Investments is the use of present value and future calculations as well as different formulas to analyze return on investments. Lean Manufacturing and Activity Analysis is about eliminating waste and focusing on the movement of goods and services in respect to customer demand. In regards to Learn Manufacturing, discuss why it’s important to focus on the movement of goods and services based on customer demand for the company you chose in Week 1. Please make an initial post and two replies to either your classmates or professor. The initial post must be at least 75-150 words with one external reference in APA format, while your replies must be at least 100 words. View your discussion rubric. |
Daniela Contreras
Week 6 Discussion
Hello everyone,
Even Apple, one of the greatest marketers of all time, can make mistakes. Apple’s consistent marketing excellence is based on a set of fundamental principles that others may learn from and adapt. Simultaneously, as with so many other aspects of management, strengths can quickly transform into flaws or points of vulnerability.
Marketers who want to hit Apple’s heights must examine the factors that have contributed to the company’s long reign at the top. However, merely copying Apple isn’t enough. Any of these marketing strategies can backfire if not carefully considered and executed, as Apple is currently experiencing.
Some of the reasons why Apple has remained a consistently excellent marketer for more than a decade, and a couple of the pitfalls they can avoid are for example, create an experience ecosystem, foster a community of evangelists, organize sales and marketing by customer, nor product, control pricing, use customer-based metrics, unpack simplicity, foster the employer brand.
Wojciech Suszylo
Week 6 Discussion
Class,
For a company like BMW, the demand for automobiles and motorcycles is fairly steady. However, by analyzing customer demand one can see that demand increases around september when the new models come into the market. This causes BMW to increase production and ship more vehicles to different countries. One thing that BMW cannot get away from is empty backhaul. For example, from a transportation perspective the vehicles are shipped via sea and then they are hauled over commercial trailer to the destination. Once the vehicles are dropped off, the truck must return to the plant empty-known as empty backhaul (LOG435 Grantham University). The company must be effective on planning those shipments to make sure the trucks do not return empty, thus reducing waste.
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