The staple company manufactures a product that is expected to incur $ 36 per unit in variable production costs and sell for $ 60 per unit. the sales commission is 10% of the sales price. due to intense competition, staple actually sold 200 units for $ 50 per unit. the actual variable production costs incurred were $ 35.00 per unit. calculate the total contribution margin and contribution margin ratio at the expected price/costs and the actual price/costs. how might management use this information?

Expected   Real  

$12,000  $10,000   Sales  

$60           $50   Unit Price  

200            200   Quantity  

-$7,200           -$7,000  COGS  

$36            $35   Unit Cost  

-$1.200           -$500   Sales Comission 10%  

$3,600            $2,500   Contribution MARGIN  

30%                   25%  

Explanation:

The management could use this information to see that with the actual condition of the market the contribution margin  

hencefort will bee lower that expected, it's supposed that the costs are operating at their level of efficiency so the only value that it's possible to adjust are the commission paid  

but the impact in the Contribution Margin wont be so much and it will have a negative impact in the salesforce.  

So the only information usefull here it's that the changes in the market conditions will impact in the future Contribution Margin of the company.  

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

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