Step 7 and 8… the end is near

light-illusion

So reading through the instructions for Step 7 I felt surprisingly calm…that doesn’t seem right haha.  As I typed up my Step 7 draft, which I have included for you for feedback if you’re keen (pretty please). I decided to make a quick checklist to make sure I have included all of the requirements for this step as Maria did say on the lecture that the little bits count too.

  1. Identify 3 products or services
  2. Estimate/Guess selling price
  3. Estimate/Guess variable cost
  4. Comment on Contribution Margins you calculated
  5. Discuss why the contribution margins are different or similar for your three products/services
  6. Identify constraints resources and market
  7. Comment on why the constraints might be relevant when deciding what products your company should produce and sell

I realise this is only 4 marks but I am keen to know if I am on the right track with my explanations.

Britvic-PLC-Company-Spreadsheet-Final-by-Sarah-Zillmann 03.05.17
***Updated 25.05.17***

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5 thoughts on “Step 7 and 8… the end is near

  1. Hi Sarah, once again your work is very thorough.
    I was a little confused by your contribution margin though.
    From the lecture I gathered the contribution margin = sales price – variable costs. With the contribution = a dollar figure. I can see you have done a percentage but where is your dollar figure (if that makes sense?).
    Also for a resource constraint maybe look at where your company gets some of its ingredients from. If they are using another company that supplies some of the main ingredients this could be a resource constraint if the supplier was unable to meet the required demand due to unforeseen circumstances and therefore your firm would need to spend time finding an alternative supplier. Are there many alternative suppliers of your core ingredients?
    Just something you could look at 😊

    Liked by 1 person

    • Hi Dani, thank you! I thought that CM=S-VC too but someone else said to change what I previously had to this. I will change it back again ☺️
      I hadn’t considered the resourcing bit so will go back and look again at this too. Being mostly soft drink I wonder if syrup or sugar could be used in a hyperthetical scenario…

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      • It gets hard and confusing when different people have different views. I just try and follow what Maria does.
        Good luck with the resource constraint. I don’t know if it is legitimate or not but something to look into 😊

        Liked by 1 person

  2. Hi Sarah – The calc is correct. All I can suggest is that you have a small level of equity and more financing is being used from bank loans and creditors than shareholder investments. leave it as it is; it’s a ‘curly one’ and should generate some debate and discussion when the time comes.

    Somebody else may have a differing opinion to me; but that is my explanation and thoughts 😉

    Liked by 1 person

    • Thanks Suzy, I did wonder this because it appears that my company borrows a lot of money and while they appear to make a profit i don’t think it’s enough to cover their debts. I will look forward to the discussions to gain a better insight 🙂

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