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    cost-volume-profit analysis

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    Westfield Corporation makes two different boat anchors?a traditional fishing anchor and a high-end yacht anchor?using the same production machinery. The contribution margin of the yacht anchor is three times as high as that of the other product. The company is currently operating at full capacity and has been doing so for nearly two years. Ralph Sampson, the company's CEO, want to cut back on production of the fishing anchor so that the company can make more yacht anchors. He says that this is a "no-brainer" because the contribution margin of the yacht anchor is so much higher.

    Instructions
    Write a short memo to Ralph Sampson describing the analysis that the company should do before it makes this decision and any other considerations that would affect the decision.

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    https://brainmass.com/economics/factors-of-production/cost-volume-profit-analysis-279836

    Solution Preview

    Dear Student,

    Thank you for using BM.
    Below are my answers.

    ANSWERS

    Date : [date]
    To : Ralph Sampson
    Chief Executive Officer
    Westfield Corporation
    From : [name]
    [position]
    Westfield Corporation
    Subject : Cost-Volume-Profit Analysis

    +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

    First, contribution margin is the difference between a product's price and its ...

    Solution Summary

    Contribution margin is featured.

    $2.19