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Analyse components of Contributon Margin for MarCo Corporation and Polo Corporation for the year ended 2027. Marco Corporation Polo Corporation Contribution Analysis of Income Forecast
Analyse components of Contributon Margin for MarCo Corporation and Polo Corporation for the year ended 2027. Marco Corporation Polo Corporation Contribution Analysis of Income Forecast for 2027 Contribution Analysis of Income Forecast for 2027 Sales (5,000 x $1,000) $5,000,000 100% Sales (5,000 x $1,000) $5,000,000 100% Variable Costs (5,000 x $900) 4,500.000 90% Variable Costs (5,000 x $400) 2.000,000 40% Contribution (Margin) $ 500,000 10% Contribution (Margin) $3,000.0 Fixed Costs $ 500,000 Fixed Costs $3,000,000 Net Income $ -- 0 - Net Income $ --0 - The business idea that you had developed for BUS 1041 a few years ago was a start-up phenomenon. Amazon bought you out for $288 million and you're now an Angel Investor. You're analyzing income forecasts of two companies that make the same product and sell to the same market. Owners of both firms are seeking $250,000 to expand their businesses. Based on the foregoing information, in which business would you invest? (1 point) Explain your rationale in terms of margin contributions. (4 points)Will E. Coyote owns home-based firm, Coyote Sports, a snowboard manufacturer. Production cost is $500 per snowboard and Coyote pays sales associates $300 per snowboard sold. Therefore, variable costs are $800 per snowboard. Each snowboard sells for $2,000, which makes the contribution margin equal to $1,200 ($2,000 - ($500 + $300)) per snowboard. Additionally, Coyote Sports incurs fixed costs of $1,200,000. Breakeven Point (Units) = Fixed Costs / (Selling Price/Unit - Variable Costs/Unit) a) Using the breakeven formula, determine how many snowboards Coyote needs to sell in order to breakeven. Show your work (1). b) How much in sales would Coyote need to achieve in order to breakeven? Show your work (1) c) Suppose that Coyote wants to achieve profits of $4,000,000. Using a modified version of the breakeven formula, determine how many snowboards Coyote needs to sell in order to achieve pre-tax income of $600,000. Show your work (3)
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