Multiple Margin

Reporting

Margin 1 xx,xxx.xx xx,xxx.xx

Region II Customer 2 Product A Product B

Elements Marginal Cost Full Cost Marginal Cost Full Cost Revenues xxx,xxx.xx xxx,xxx.xx xx,xxx.xx xx,xxx.xx Raw Material x,xxx.xx x,xxx.xx x,xxx.xx x,xxx.xx

Production Labor xxx.xx x,xxx.xx xx.xx xx.xx

Production Machine xx.xx x,xxx.xx xxx.xx xxx.xx

Raw Mat.Movements xx.xx xxx.xx xx.xx xx.xx

Finished Goods Move xx.xx xxx.xx xx.xx xx.xx

Margin 1 xx,xxx.xx xx,xxx.xx x,xxx.xx xxx.xx

Total Customer Contribution xx,xxx.xx xx,xxx.xx

Finance: Invoicing xxx.xx xxx.xx

Shipping Costs x,xxx.xx x,xxx.xx

Returns xx.xx xx.xx

Margin 2 xx.xxx.xx x,xxx.xx

Revenues xxx,xxx.xx xxx,xxx.xx Raw Material x,xxx.xx x,xxx.xx Production Labor xxx.xx x,xxx.xx Production Machine xx.xx x,xxx.xx Raw Mat.Movements xx.xx xxx.xx Finished Goods Move xx.xx xxx.xx

Margin 1 xx,xxx.xx xx,xxx.xx

Region II Customer 1 Product A Product B

Elements Marginal Cost Full Cost Marginal Cost Full Cost Revenues xxx,xxx.xx xxx,xxx.xx xx,xxx.xx xx,xxx.xx Raw Material x,xxx.xx x,xxx.xx x,xxx.xx x,xxx.xx

Production Labor xxx.xx x,xxx.xx xx.xx xx.xx

Production Machine xx.xx x,xxx.xx xxx.xx xxx.xx

Raw Mat.Movements xx.xx xxx.xx xx.xx xx.xx

Finished Goods Move xx.xx xxx.xx xx.xx xx.xx

Margin 1 xx,xxx.xx xx,xxx.xx x,xxx.xx xxx.xx

Total Product Contributions xx,xxx.xx xx,xxx.xx

Finance: Invoicing xxx.xx xxx.xx

Shipping Costs x,xxx.xx x,xxx.xx

Returns xx.xx xx.xx

Margin 2 xx.xxx.xx x,xxx.xx

Region II : Summary

Total Regional Contribution xx,xxx.xx xx,xxx.xx

Marketing x,xxx.xx x,xxx.xx

Product Storage x,xxx.xx x,xxx.xx

Regional Capacity O/U Absorption - xxx.xx

Margin 3 x,xxx.xx xxx.xx

Marginal Cost Full Cost Revenues xxx,xxx.xx xxx,xxx.xx

Raw Material x,xxx.xx x,xxx.xx Production Labor xxx.xx x,xxx.xx Production Machine xx.xx x,xxx.xx Raw Mat.Movements xx.xx xxx.xx Finished Goods Move xx.xx xxx.xx

Margin 1 xx,xxx.xx xx,xxx.xx

Region I Customer 2 Product A Product B

Elements Marginal Cost Full Cost Marginal Cost Full Cost Revenues xxx,xxx.xx xxx,xxx.xx xx,xxx.xx xx,xxx.xx Raw Material x,xxx.xx x,xxx.xx x,xxx.xx x,xxx.xx

Production Labor xxx.xx x,xxx.xx xx.xx xx.xx

Production Machine xx.xx x,xxx.xx xxx.xx xxx.xx

Raw Mat.Movements xx.xx xxx.xx xx.xx xx.xx

Finished Goods Move xx.xx xxx.xx xx.xx xx.xx

Margin 1 xx,xxx.xx xx,xxx.xx x,xxx.xx xxx.xx

Total Customer Contribution xx,xxx.xx xx,xxx.xx

Finance: Invoicing xxx.xx xxx.xx

Shipping Costs x,xxx.xx x,xxx.xx

Returns xx.xx xx.xx

Margin 2 xx.xxx.xx x,xxx.xx

Revenues xxx,xxx.xx xxx,xxx.xx Raw Material x,xxx.xx x,xxx.xx Production Labor xxx.xx x,xxx.xx Production Machine xx.xx x,xxx.xx Raw Mat.Movements xx.xx xxx.xx Finished Goods Move xx.xx xxx.xx

Margin 1 xx,xxx.xx xx,xxx.xx

Region I Customer 1 Product A Product B

Elements Marginal Cost Full Cost Marginal Cost Full Cost Revenues xxx,xxx.xx xxx,xxx.xx xx,xxx.xx xx,xxx.xx Raw Material x,xxx.xx x,xxx.xx x,xxx.xx x,xxx.xx

Production Labor xxx.xx x,xxx.xx xx.xx xx.xx

Production Machine xx.xx x,xxx.xx xxx.xx xxx.xx

Raw Mat.Movements xx.xx xxx.xx xx.xx xx.xx

Fin.Goods Movements xx.xx xxx.xx xx.xx xx.xx

Margin 1 xx,xxx.xx xx,xxx.xx x,xxx.xx xxx.xx

Total Product Contributions xx,xxx.xx xx,xxx.xx

Finance: Invoicing xxx.xx xxx.xx

Shipping Costs x,xxx.xx x,xxx.xx

Returns xx.xx xx.xx

Margin 2 xx.xxx.xx x,xxx.xx

Region I : Summary

Total Regional Contribution xx,xxx.xx xx,xxx.xx

Marketing x,xxx.xx x,xxx.xx

Product Storage x,xxx.xx x,xxx.xx

Regional Capacity O/U Absorption - xxx.xx

Margin 3 x,xxx.xx xxx.xx

Marginal Cost Full Cost

Marginal Cost Full Cost Company Result

• Admin, sales & marketing OH added after calculating

product-specific cost

• Dedicated overhead (eg.

product group marketing costs) allocated by segment

• Equipment, product R&D cost applied at the product group level

Product Decisions Using Financial Depreciation

100 200 300

1 2 3 4 5 6 7 8 9 10

Dollars

Years

Asset Economic Life

Asset Charge Rate

Products Profitable to Produce

Conclusion: Products A & B - Both Initially Unprofitable to Produce. Both Profitable to Produce in the Last 5 Years.

Product Break-even Charge Rate

400

Product A

Product B

Product Decisions Using ‘Replacement Value over Economic Life’ Depreciation

Dollars

Years

Asset Economic Life

Asset Charge Rate

Products Profitable to Produce

Conclusion: Product A - Always Profitable to Produce. Product B-is Never Profitable to Produce

Product Break-even Charge Rate

100 200 300

1 2 3 4 5 6 7 8 9 10

400

Product A

Product B