1.

REVENUE/SALES
(VARIABLE COST)
CONTRIBUTION
MARGIN
(FIXED COST)
OPERATING PROFIT

CONTRIBUTION MARGIN INCOME STATEMENT SNACK SHOP FALL 2009

$ $
Sales 3,136.48

Variable Cost
Cost of goods sold 1,874.29
Selling and administrative costs
Total Variable Cost 1,874.29

Contribution Margin 1,262.19

Fixed Cost
Allocation to NYC trip 750
Contribution to department budget 250
Total Fixed Cost 1000

X-437.52

Operating Profit

CONTRIBUTION MARGIN RATIO

CM= TOTAL REVENUE - VARIABLE COST

TOTAL REVENUE

SPRING
2009

TOTAL REVENUE 3,136.48

(VARIABLE COST) 1,874.29
1,262.19
/TOTAL REVENUE 3,136.48

CONTRIBUTION MARGIN RATIO 0.40242

 CONTRIBUTION MARGIN INCOME STATEMENT SNACK SHOP
SPRING FALL
2010 2010
$ $ $ $
3,250.9
Sales 7 3,292.65

Variable Cost
Cost of good sold 1,760.43 1,705.32
Selling and administrative
costs
1,760.4
Total Variable Cost 3 1,705.32

1,490.5
Contribution Margin 4 1,587.33

Fixed Cost
Allocation to NYC trip 750 750
Contribution to department
budget 250 250
Total Fixed Cost 1000 1000

Operating Profit 490.54 587.33

CONTRIBUTION MARGIN RATIO

SPRING FALL
2010 2010

TOTAL REVENUE 3,250.97 3,292.65

(VARIABLE COST) 1,760.43 1,705.32
1,490.54 1,587.33
/TOTAL REVENUE 3,250.97 3,292.65

CONTRIBUTION MARGIN RATIO 0.45849 0.482083

 CONTRIBUTION MARGIN INCOME STATEMENT SNACK SHOP
SPRING FALL
2011 2011
$ $ $ $
Sales 2,122.63 2,582.67
Variable Cost
Cost of goods sold 1,796.43 1,370.19
Selling and administrative
470
costs
Total Variable Cost 1,796.43 1,840.19
Contribution Margin 326.2 742.48
Fixed Cost
Card scanner/reader (30*6
months) 180 180
Allocation to NYC trip 750 750
Contribution to department
250 250
budget
Total Fixed Cost 1180 1180
Operating Profit -853.80 -437.52

CONTRIBUTION MARGIN RATIO

SPRING FALL
2011 2011

TOTAL REVENUE 2,122.63 2,582.67

(VARIABLE COST) 1,796.43 1,840.19
326.20 742.48
2,122.6 2,582.6
/TOTAL REVENUE 3 7

CONTRIBUTION
MARGIN RATIO 0.15368 0.28749
 CONTRIBUTION MARGIN INCOME STATEMENT SNACK SHOP
SPRING FALL
2012 2012
$ $ $ $
Sales 2,094.95 2,099.73

Variable Cost
Cost of good sold 1,285.60 1,275.40
Selling and
administrative costs 576.06
Total Variable Cost 1,285.60 1,851.46

Contribution Margin 809.35 248.27

Fixed Cost
Card scanner/reader
(30*6 months) 180 180
Allocation to NYC trip 750 750
Contribution to
department budget 250 250
Total Fixed Cost 1180 1180
Operating Profit -370.65 -931.73

CONTRIBUTION MARGIN RATIO

SPRING FALL
2012 2012

TOTAL REVENUE 2,094.95 2,099.73

(VARIABLE COST) 1,285.60 1851.46
809.35 248.27
/TOTAL REVENUE 2,094.95 2,099.73

CONTRIBUTION MARGIN
RATIO 0.38633 0.11824
Overall Simple Average of The Semesters.
CONTRIBUTION MARGIN RATIO

Fall 2009 0.40242

Spring 2010 0.45849
Fall 2010 0.482083
Spring 2011 0.15368
Fall 2011 0.28749
Spring 2012 0.38633
Fall 2012 0.11824
 TOTAL 2.288733
0.326961
SIMPLE AVERAGE 9
My observations about the contribution margin over time is the contribution margin ratio
increases when there is sales increase. 

2. FoodFunds was accepted to use at the start of the spring 2011 semester. Therefore, we
must calculate BEP before spring 2011 semester.

BREAK-EVEN POINT (SALES DOLLARS)

BEP FIXED COSTS

CONTRIBUTION
MARGIN RATIO

Fall 2009 Spring 2010 Fall 2010

Fixed Costs 1000 1000 1000

Contribution Margin 0.40242 0.45849 0.482083

BEP $ 2484.966 2181.072652 2074.331599

3. The contribution margin ratios which I computed in 1 and 2 is the difference between the
Snack Shop company's sales and variable expenses, expressed as a percentage where’s the
gross profit percentages shows a good indicator of the Snack Shop’s product health and it is
also the easy metric for comparing your product with another product. Contribution margin
gives the most accurate measure of breakeven because its represent the revenue that
contributes to your profits. Snack Shop need to increase the sales to increase the overall
contribution margin ratio.

4. Spring
2013

Net Sales 2,040.00

Cost of sales
Beg. Inventory 387.85
 Add: purchases 1,264.48
Available for sale 1,652.33
Less: ending inventory 509.93
Cost of goods sold 1142.4 2040 * 56%(Average GP)
Gross profit 897.60

PRO-FORMA CONTRIBUTION MARGIN INCOME STATEMENT SNACK SHOP

SPRING
2013
$ $
Sales 2,040.00

Variable Cost
Cost of goods sold 1142.4
Selling and administrative costs
Total Variable Cost 1,142.40

Contribution Margin 897.60

Fixed Cost
Card scanner/reader (30*6 months) 180
Allocation to NYC trip 750
Contribution to department budget 250
Total Fixed Cost 1180

Operating Profit -282.40

5.
SPRING
2013
TOTAL REVENUE 2,040.00
(VARIABLE COST) 1,142.40
897.60
/TOTAL REVENUE 2,040.00
CONTRIBUTION MARGIN RATIO 0.44

BREAK-EVEN POINT (SALES DOLLARS)

BEP FIXED COSTS

CONTRIBUTION MARGIN RATIO

Spring 2013
 Fixed Costs 1180
*Contribution Margin 0.44

4090.909091
BEP $

$4090.909091 must be must be generated to break even after accepting FoodFunds and this
volume can attainable by the Shop in the future. Snack Shop must give more discount to
attract more student to buy and increase the revenue.

6.
BEFORE
Coffee and Bottled and canned Snacks and
Product
tea beverages candy Other
Sales Price per Unit 1.24 1.50 1.00 1.25
Sales Mix Percentage 17% 48% 29% 6%
0.21 0.72 0.29 0.08
Weighted Average CM
per Unit
1.30
Total Fixed Cost 1000
÷ Weighted Average CM
per Unit 1.30
Break-even Point in
Units of Sales Mix 771.7240315
Coffee and Bottled and canned Snacks and
Product
tea beverages candy Other
Sales Mix Percentage 17% 48% 29% 6%
× Total Break-even Units 771.7240315 771.7240315 771.7240315 771.724
Product Units at Break-
even Point 131.1930854 370.4275351 223.7999691 46.30344

Break-even Point in
dollars 
Coffee and Bottled and canned Snacks and
Product
tea beverages candy Other
Product Units at Break-
even Poin 131.1930854 370.4275351 223.7999691 771.724
× Price per Unit 1.24 1.50 1.00 1.25
Product Sales in Dollars 162.6794258 555.6413027 223.7999691 964.655
Sum: Break-even Point
in Dollars 1906.775737

AFTER
Product Coffee and Bottled and Snacks and Other
 canned
tea beverages candy
Sales Price per Unit 1.24 1.50 1.00 1.25
Sales Mix
Percentage 17% 48% 29% 6%
0.21 0.72 0.29 0.08
Weighted Average
CM per Unit 1.30

Total Fixed Cost 1180

÷ Weighted Average
CM per Unit 1.30
Break-even Point in 910.634357
Units of Sales Mix 2

Bottled and
Product Coffee and canned Snacks and
tea beverages candy Other
Sales Mix
Percentage 17% 48% 29% 6%
× Total Break-even 910.634357 910.634357
Units 2 910.6343572 2 910.6343572
Product Units at 154.807840 264.083963
Break-even Point 7 437.1044914 6 54.63806143
Break-even Point in
dollars 
Bottled and
Product Coffee and canned Snacks and
tea beverages candy Other
Product Units at 154.807840 264.083963
Break-even Point 7 437.1044914 6 910.6343572
× Price per Unit 1.24 1.50 1.00 1.25
Product Sales in 191.961722 264.083963
Dollars 5 655.6567372 6 1138.292946
Sum: Break-even
Point in Dollars 2249.99537

7. Breakeven sales dollars different when considering the weighted average contribution
margin for the sales mix than when the average contribution margin (without considering the
sales mix) is used because weighted average contribution margin for the sales mix use
percentage to calculate breakeven sales dollars where’s average contribution margin (without
considering the sales mix) use business revenue and subtracting the variable expenses.
8. I think the SnackShop should consider dropping any of its product lines because by
eliminating the any product line will saves more in fixed and variable costs than the line
brings in through revenue. Yes, changes in coffee vendor will definitely effect the
profitability if the vendor increase the cost.

9. The SnackShop must not forget to keep the raw products in the refrigerator and always be
alert on the expired date of the product, use disposable cups used to avoid waste, install
security cameras in SnackShop, choose one of your staff to act as an inventory manager to
avoid shrinkage of inventory. To combat unrecorded sales, take frequent inventory counts
and compare the actual number to the book number.