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This 3-page paper discusses under what circumstances Belk Department Stores might want to rely on a contribution margin analysis. Bibliograpy lists 1 source.
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3 pages (~225 words per page)
File: D0_MTbelkmarg.rtf
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this paper is what situation in Belk could benefit from contribution margin analysis. Before attempting to identify the situation, lets discuss what
contribution margin analysis actually is. Used in management accounting, and afforded by cost/volume/profit analysis, a contribution margin is the percentage of each
sales dollar remaining after variable costs are subtracted from the total (Business Owners Toolkit, 2009). The contribution margin helps companies make better decisions about the addition (or subtraction) of a
particular product line, or even about how to price a product or service (Business Owners Toolkit, 2009). To calculate that contribution margin,
variable costs (such as cost of goods sold, commissions and delivery charges) are subtracted from the sales (Business Owners Toolkit, 2009). Following is an example: Sales $ 462,452
Less Variable Costs: Cost of Goods Sold $ 230,934 Sales Commissions $ 58,852 Delivery Charges $ 13,984 Total Variable
Costs $ 303,770 Contribution Margin $ 158,682 34% With a contribution margin of 34%, this means that, for every
dollar of sales, $.34 remained to contribute to the companys directed (fixed) costs and profit (Business Owners Toolkit, 2009). How does
this aid Belk? If Belk wanted to make a decision to continue, or discontinue, a particular line of clothing, then it could analyze the sale of that clothing. Once it
had the gross sales revenue reported, the company could then subtract by the variable costs - in this case, it could involve salary and sales commissions, cost of goods sold
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