Company: Omicron Retail Stores

Scenario: Cost-Volume-Profit (CVP) Analysis

• Department Details:
  • Electronics Department:
    • Selling Price per Unit: $300
    • Variable Cost per Unit: $200
    • Fixed Costs: $150,000
• Apparel Department:
  • Selling Price per Unit: $150
  • Variable Cost per Unit: $100
  • Fixed Costs: $80,000

Requirements:

1. Contribution Margin Calculation:
   • Calculate the contribution margin per unit and contribution margin ratio for each department (Electronics and Apparel) at Omicron Retail Stores using marginal costing principles.

1. Break-Even Analysis:
   • Perform a break-even analysis to determine the sales revenue needed for Omicron Retail Stores to break even, considering marginal costing insights.

1. Profitability Analysis:
   • Determine which department (Electronics or Apparel) generates higher profitability based on the contribution margin ratio calculated using marginal costing.

1. Sales Mix Analysis:
   • Conduct a sales mix analysis to identify the optimal sales mix that maximizes Omicron Retail Stores' overall contribution margin, applying marginal costing concepts.

1. Strategic Pricing Decision:
   • Recommend a pricing strategy for Omicron Retail Stores to optimize profitability, considering the contribution margin analysis using marginal costing.