Company: Rho Tech Solutions

Scenario: Software Project Profitability

• Project Details:
  • Project A:
    • Revenue: $500,000
    • Variable Costs: $250,000
    • Fixed Costs: $150,000
• Project B:
  • Revenue: $700,000
  • Variable Costs: $350,000
  • Fixed Costs: $180,000

Requirements:

1. Contribution Margin Analysis:
   • Calculate the contribution margin and contribution margin ratio for each project (Project A and Project B) at Rho Tech Solutions using marginal costing principles.

1. Break-Even Analysis:
   • Perform a break-even analysis to determine the sales revenue needed for each project to break even, incorporating marginal costing insights.

1. Profitability Comparison:
   • Determine which project (Project A or Project B) is more profitable based on the contribution margin ratio calculated using marginal costing.

1. Project Performance Evaluation:
   • Evaluate the performance of Project A and Project B based on their contribution margin and profitability, applying marginal costing concepts.

1. Strategic Decision Making:
   • Recommend a strategic decision (e.g., continue, modify, or terminate) for each project at Rho Tech Solutions based on the contribution margin analysis using marginal costing.