Margin Analysis Healthy margins, the difference between a product's manufacturing cost and its price, are critical to company success. The Margin Analysis will help the Research & Development Department understand the cost of material, and the Production Department understand the effect automation has on labor costs. It will also demonstrate to the Marketing Department the importance of adequate pricing, and to the Finance Department the upper limits of profitability You will need The Production Analysis report (page 4) of the FastTrack for Round 0 The Segment Analysis reports (pages 5-9) of the FastTrack for Round O Determining Current Margin In this activity you will calculate the Contribution Margin in dollars per unit and as a percentage of the price using the information in the Production Analysis report. ShiftAuto Next 3.0 & mation Capacity Unit PrimaryUnits Inven Age Pfmn Size Material Labor Contr Next Plant Able Low 1,200 8 11/21/2011 3.1 21000 6.4 3.6 $34.00 $16.17 $10.11 20% 63% 800 161% * The above product details are for example only. Your product names and data may differ, but the process to calculate margins is identical. Useful formulas: Contribution Margin($) = Price-(Material Cost + Labor Cost) Margin Percentage (%) = Contribution Margin/Price Calculating Margins Activity In the table below enter each product's price, material cost, labor cost, and note whether or not a second shift was used (Y/N). Then use the values you entered to calculate the Contribution Margin and the Margin Percentage Incomplete Current Margin Product Name Price Material Cost Labor Cost Second Shift (Y/N) Contribution Margin (S) Contribution Margin (%) Able 34 16.17 10.11 7.72 20