Memorial University of Newfoundland

ACC 460

Exhibit I Purpose: To calculate and compare the contribution margin (CM) per unit using titanium and steel Titanium model Steel model — best case Steel model — worst case Sales price $ 225.00 $ 178.00 $ 178.00 Direct material (144.00) (84.00) (100.80) Note 1 Direct labour (11.00) (3.67) (7.33) Note 2 Variable overhead (7.00) (2.33) (4.67) Note 3 CM per unit $ 63.00 $ 88.00 $ 65.20 Expected units sold 10,000 10,000 10,000 Total CM $ 630,000 $ 880,000 $ 652,000 Note 4 Potential savings per unit $ 25 $ 2 Note 1: Steel would cost $60 less per unit at current prices ($144 – $