WEEK 4 2021-03-22 1.b.: Contribution Margin Format Income Statement Parson Vegetable Company Contribution Margin Income Statement Chicken Sensations SALES (GROSS $) SALES (CASES) LESS: VARIABLE COSTS COUPON COMMISSION RAW MATERIALS --CHICKEN --VEGETABLES -----SPAETZELS PACKAGING --BAGS ----BOX LABOR -DIRECT LABOR --VAR. MFG OVERHEAD $ 63,720,000.00 1,770,000 CASES SA SA $ 4,248,000.00 $2.40/CASE - FIRST YEAR $ 3,823,200.00 6% BROKERAGE COMMISSION $ 10,620,000.00 $6.00/CASE $ 8,628,750.00 $4.875/CASE $ $ SA SA $ 597,375.00 $0.3375/CASE 4,248,000.00 $2.40/CASE 531,000.00 $0.30/CASE $ 7,965,000.00 $4.50/CASE $ 10,620,000.00 $6.00/CASE TOTAL VARIABLE COST $ 51,281,325.00 VARIABLE COST: CONTRIBUTION MARGIN | $ 12,438,675.00 CONTRIBUTION MARGIN RATIO 19.52% LESS: FIXED COSTS SLOTTING EXP PACKAGE DESIGN EXP SALES SALARIES (ADDITIONAL) RETROFIT COST EXP 1. b. Calculation Notes: $ $ 6,000,000.00 VIKKI - FIRST YEAR 2,000,000.00 FIRST YEAR $ $ 400,000.00 ADDTL BODIES FOR CHICK SENS 400,000.00 *$2,000,000 / 5 YRS (NO SALVAGE) TOTAL FIXED COST $ 8,800,000.00 NET INCOME $ 3,638,675.00 WEEK 4 1.c. Breakeven Analysis Breakeven point in Cases SALES (GROSS $) $ 63,720,000.00 SALES (CASES) 1,770,000 CASES VARIABLE COST: CONTRIBUTION MARGIN $ 12,438,675.00 FIXED COST: $ 8,800,000.00 CONTRIBUTION PER CASE BREAK EVEN CASE SALES 7.03 1.252.224 CASES Breakeven point in Sales Dollars SALES (GROSS $) $ 63,720,000.00 SALES (CASES) 1,770,000 CASES VARIABLE COST: CONTRIBUTION MARGIN CONTRIBUTION RATIO $ 12,438,675.00 19.52% FIXED COST: 8,800,000.00 CONTRIBUTION PER CASE B.E. CASE SALES DOLLARS $ 7.03. $ 45,080,042.69 2021-03-22 1. d. Margin of Safety a. Margin of Safety (Expected - BreakEven) EXPECTED BREAKEVEN MARGIN OF SAFETY (CASES) WEEK 4 2021-03-22 CASES 1,770,000 1,252,224 517,776 b. Margin of Safety (Dollars) = (Margin of Safety Cases * Selling Price per Case) EXPECTED B.E. CASE SALES DOLLARS MARGIN OF SAFETY SALES $ $63,720,000.00 $45,080,042.69 $18,639,957.31 c. Margin of Safety Ratio (Expected - BreakEven)/Expected MARGIN OF SAFETY RATIO 29.25% 1.e.: Sensitivity Analysis Results Parson Vegetable Company Sensitivity Analysis Results Chicken Sensations Operating Income: Contribution Margin Ratio Profit Margin Breakeven Sales (in Cases). Margin of Safety (in Cases) Margin of Safety Ratio. 1. e. Calculation Notes: Operating Income Contribution Margin Ratio Profit Margin Breakeven Sales (in Cases). Margin of Safety (in Cases) Margin of Safety Ratio Parson Vegetable Company Sensitivity Analysis Results Chicken Sensations Pessimistic Original Optimistic