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Determining: ROI, Contribution Margin, & Turnover

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Using the information given in the attached Excel documents, please compute the following:
- The company's ROI
- The company's contribution margin
- Turnover for the company

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Solution Summary

This solution considers information provided in the attached Excel documents. The expert explains how to compute the company's ROI, contribution margin, and the turnover.

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Note: The formula sheet is given in the excel which is attached with this.

Contribution Margin

The contribution margin is computed by subtracting the total variable expenses from total revenues, or by subtracting per-unit variable expenses from per-unit revenues. The contribution margin ratio is the contribution margin divided by revenue; this ratio can be computed on either a total amount or a per unit amount. Contribution margin is the difference between revenues and total variable expenses. It can be expressed in total dollars or on a percentage basis, called contribution margin ratio.

The contribution margin is used in business to see the total amount that can be used to cover fixed expenses and earn a profit. And, the contribution margin ratio is used to see what portion (percentage) of each sales dollar is available to cover fixed expenses and earn a profit.

The contribution margin is very useful in preparing ...

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