Accounting for Managers: Interpreting accounting information for decision-making

Table A3.6

(continued

)

(d)

Cryod

Genet

Yogen

Total

Cryod

Genet

Yogen

Product profitability 4: throughputSales £’000

4,500

2,300

2,500

9,300

Sales

1,500

1,150

2,500

less:

Contribution margin

2,100

760

1,350

4,210

Direct materials

450

600

900

Throughput value

1,050

550

1,600

Mfg overhead allocation

0

0

0

3,500

No. machine hours

12

3

8

Gross profit

710

Throughput permachine hour

87.50

183.33

200.00

Less non-mfg overhead

600

T/A ranking

3

2

1

Net profit

110

Product profitability 5: targetSales £’000

4,500

2,300

2,500

9,300

Cryod

Genet

Yogen

Total

Investment

3,000

1,000

4,000

8,000

Contribution margin

2,100

760

1,350

4,210

Required return 10%

300

100

400

800

Mfg overhead allocation

0

0

0

3,500

Gross profit

710

Less non-mfg overhead

600

Net profit

110