Purchase Solution

General Mills highest variable cost; Eastman Kodak contribution margin

Not what you're looking for?

Ask Custom Question

Variable Cost to Break Even

General Mills makes Wheaties, Cheerios, Betty Crocker cake mixes, and many other food products. Suppose the product manager of a new General Mills cereal has determined that the appropriate wholesale price for a carton of the cereal is $48.

Fixed costs of the production and marketing of the cereal is $15 million.

1. - The product manager estimates that she can sell 800,000 cartons at the $48 price.

What is the largest variable cost per carton that General Mills can pay and still achieve a profit of $1 million?

2. - Suppose the variable cost is $30 per carton. What profit (or loss) would General Mills expect?

Eastman Kodak Company is a provider of imaging technology products and services to the photographic, graphic communications, and health-care markets. A condensed 2005 income statement follows (in millions

Sales $14,268
Cost of goods sold 10,617
Gross margin 3,651
Other operating expenses 4,417
Loss from continuing operations (766)

Assume that $2,400 million of the cost of goods sold is a fixed cost representing depreciation and other production costs that do not change with the volume of production. In addition, $3000 million of the other operating expenses is fixed.

1. Compute the total contribution margin for 2005 and the contribution margin percentage. Explain why the contribution margin differs from the gross margin.

Purchase this Solution

Solution Summary

General Mills highest variable costs for Eastman Kodak contributions.

Purchase this Solution


Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.