In this unit, you have been introduced to contribution margin, break-even analysis, and cost-volume-profit analysis. The contribution margin is how much a product contributes to covering fixed costs. Break-even is the point at which both variable and fixed costs are recouped through pricing, with no amounts left over. Both contribution margin and break-even analyses are part of cost-volume-profit analyses (CVP); however, in addition, CVP can be further expanded to determine how changes in prices, costs, and volume impact profits. CVP can also be used to determine the volume needed to make a targeted profit, which can be expressed in both units and sales dollars. Analyses of these variables are critical to management decision-making process. Use this background knowledge to respond to the discussion prompt below:

Refer to the manufacturing company you selected for the Unit 2 Discussion and explain how you would determine the company's contribution margin and contribution margin percent. In your initial post include the following:

Identify which specific variables should be included in the calculation.

Illustrate your explanation by calculating the contribution margin and contribution margin percent using hypothetical values.

Explain what your calculated results tell you about the company's sales and cost structure.