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Joseph manages a local camping equipment store, where the top-selling sleeping bag brings in $4,800 of contribution margin for the company each month. The business
Joseph manages a local camping equipment store, where the top-selling sleeping bag brings in $4,800 of contribution margin for the company each month. The business currently manufactures these sleeping bags, but it's considering a contract with a new supplier for a similar quality product. The company's contribution margin will go down to $2,100 next month for the sleeping bags category if Joseph decides to purchase from the supplier instead of manufacturing in-house. If he decides to buy instead of make, there will be available capacity for other products. Joseph estimates that the store can increase contribution margin in its other categories by at least $3,600 per month with that extra capacity. Joseph manages a local camping equipment store, where the top-selling sleeping bag brings in $4,800 of contribution margin for the company each month. The business currently manufactures these sleeping bags, but it's considering a contract with a new supplier for a similar quality product. The company's contribution margin will go down to $2,100 next month for the sleeping bags category if Joseph decides to purchase from the supplier instead of manufacturing in-house. If he decides to buy instead of make, there will be available capacity for other products. Joseph estimates that the store can increase contribution margin in its other categories by at least $3,600 per month with that extra capacity
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