/02/2010 EquipBaby EquipBaby runs a shop selling equipment for babies within 3 main ranges. Figures for the past month are as follows: Sales revenue -Variable cost = Contribution margin Contribution margin ratio Pushchairs 50,000 35,000 15,000 30.00% Car Seats 15,000 10,000 5,000 33.33% Accessories 12,000 6,000 6,000 50.00% Total 77,000 51,000 26,000 33.77% 8,000 Direct fixed cost -Wages -rent = Segment margin 1.750 6,000 7,250 1.750 2,000 1,250 4,500 3,000 -1,500 11,000 7,000 Indirect fixed cost 5,000 Profit 2,000 1-Calculate the sales revenue that will generate a zero segment margin for the "Accessories" range 2-What would be the segment margin of this range if monthly sales revenue amounted to 13,000? 3-If 13,000 is the maximum possible sales revenue for the 'Accessories' range, should EquipBaby keep selling this range of products? (justify your answer and mention your assumptions) 4-In order to promote its shop, the company is thinking of making a local advertising campaign, which would cost 10,000. By what percentage have the overall sales to increase if this campaign is to be profitable in a quarter (3 months]? (mix of sales will be assumed to remain the same than in the above table) Optimal A company manufactures two types of products, X and Y, using a specific machine which cannot work more than 1,000 hours per month. The production of one unit of product X requires using this machine for 30 min, while it would take 20 min to make a product Y. The unit contribution margin amounts to 30 for X and to 25 for Y. 1-Calculate the contribution margin per unit of scarce resource for X and for Y. 2-Based on this calculation, what mix of sales would enable the company to generate the highest profit