$4\mathrm{.}2$ Contribution Margin

Wiseman Inc. Manufacturing produces Health Drinks in a Manufacturing facility. The products are:

$$ Health Shake

$$ Pre$-$Work out

$$ Post$-$ Work out

Wiseman introduced a $4$th Product: Health bar, made from $3$ most healthy food inputs, Broccoli, Beetroot and Locusts.

Wiseman produces all these health products in the same manufacturing facility and cannot change fixed costs for $3$ years.

Products$/$Account Codes Health Shake Pre$-$Work out Post$-$Work out Health Bar Wiseman Total

Sales $10,00040,00062,00022,000134,000$

Cost of Goods sold $7,20026,00041,00018,10092,300$

Other Relevant Costs $1,0002,2004,4004,10011,700$

Contribution Margin $1,800?16,600(200)30,000$

Allocated fixed Costs $2,0006,0008,800400020,800$

Operating Income $(200)5,800?(4,200)9,200$

REQUIRED:

$1)$ Calculate:

$$ the Contribution Margin for Pre$-$Work

$$ the Operating Income for Post$-$Work out

$2)$ Write out a definition for Contribution Margin.

$3)$ Referencing the above definition, which of the above product lines would you cut $($stop production on$)$ to increase profitability of Wiseman Inc. Manufacturing?

$$ Explain why you would continue production with other products.

$$ Choose the company$/$companies that you would stop production on and explain why.