Healthy margins, the difference between a product’s manufacturing cost and its price, are critical to company success. The Margin Analysis will help the Research & Development Department understand the cost of material, and the Production Department understand the effect automation has on labor costs. It will also demonstrate to the Marketing Department the importance of adequate pricing, and to the Finance Department the upper limits of profitability.

Enter the name of your company’s product for each segment in the Product Name column in the top part of Form 4. You will find this information in the Production Analysis, page 4 of The Capstone® Courier for Round 0. The names of your products start with the first letter of your company’s name. If you are not yet assigned to a company, or if you are playing the Footrace version of the simulation, use the Andrews Company information.

Next, enter each product’s price, material cost, labor cost, and note whether or not (Y/N) a second shift was used.

Contribution Margin Price - (Material Cost + Labor Cost)

Calculate the Margin Percentage:

Margin Percentage = Contribution Margin / Price

Enter these results into the top part of Form 4.