Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 USP = 2 × €200 + €130 = €530
UVC = 2 × €120 + €90 = €330
FC = €2,000
€530
Q − €330
Q − €2,000 = 0
Q = 10
bundles → (2 Do-Alls/bundle) × 10 bundles = 20 Do-Alls
(1 Bundle/bundle) × 10 bundles = 10 Superwords This example illustrates how the CM helps firms decide which products to push. In the absence
of production constraints, shifting the marketing efforts to high CM products – if successful – can increase profits dramatically. This is one reason why the dealers push loaded (high CM) rather than stripped-down cars. If, however, the firm faces production constraints,
such as limited MH or DLH, then management should push products that have the highest CM per unit of the constraint.
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