Reference no: EM13503758

Margin Analysis

Please read the following scenario and answer the questions below. Please explain your reasoning.

Westerman Equipment Inc. manufactures and sells kitchen cooking products throughout the state. The company employs two salespersons. The following contribution margin by salesperson analysis was prepared:

Westerman Equipment Inc. Contribution Margin Analysis by Salesperson Beatty		Canace
Sales	$150,000	$170,000
Variable cost of goods sold	48,000	81,600
Manufacturing margin	$102,000	$ 88,400
Variable selling expenses
Commissions	$                   7,500	$     8,500
Promotion expenses	46,500	45,900
Total variable selling expenses	$ 54,000	$ 54,400
Contribution margin	$ 48,000	$ 34,000

1. Calculate the manufacturing margin as a percent of sales and the contribution margin ratio for each salesperson.

2. Interpret the report and provide recommendations to the two salespersons for improving profitability. Explain the results of your analysis.