Chi Pharmaceuticals

Scenario: Product Costing and Pricing Strategy

Product	Selling Price per Unit ($)	Variable Cost per Unit ($)	Fixed Costs ($)
Product X	80	50	100,000
Product Y	120	70	150,000

Requirements:

1. Contribution Margin Calculation:
   • Calculate the contribution margin per unit and contribution margin ratio for Product X and Product Y at Chi Pharmaceuticals using marginal costing principles.

1. Break-Even Analysis:
   • Perform a break-even analysis to determine the number of units and sales revenue needed for Chi Pharmaceuticals to break even, considering marginal costing insights.

1. Profitability Analysis:
   • Determine which product (Product X or Product Y) generates higher profitability based on the contribution margin ratio calculated using marginal costing.

1. Pricing Strategy Formulation:
   • Recommend a pricing strategy for each product at Chi Pharmaceuticals to achieve profitability targets, considering the contribution margin analysis using marginal costing.

1. Cost Management Strategies:
   • Recommend two strategies Chi Pharmaceuticals could adopt to manage costs effectively and improve profitability, based on marginal costing insights.