Joint Products CVP Analysis – Time for Methodical Review
Journal: Journal of Economics and Business (Vol.2, No. 4)Publication Date: 2019-12-30
Authors : Enyi Patrick Enyi;
Page : 1288-1297
Keywords : Contribution Margin Ratio; Weighted Contribution Margin Ratio; Reversed Contribution Margin Ratio; Breakeven Point; Cost-Volume-Profit Analysis;
Abstract
This paper compares the effectiveness of the Weighted-Contribution-Margin (WCM) and the Reversed-Contribution-Margin-Ratio (RCMR) in multiproduct Cost-Volume-Profit analysis applications. Using a rehashed-activity data and the OLS regression to analyse six joint-products over 42 weeks operation, it was found that the WCM lacks analytical efficiency and generates suboptimal products mix because it ignores the inverse relationship between a product's contribution-margin-ratio (CMR) and its breakeven point (BEP). These deficiencies present potential resource allocation problems during periods of low capacity utilization periods. The paper recommends the use of the RCMR which factors the tradeoff effects of the CMR/BEP in its measurement.
Other Latest Articles
- Calculate the Exchange Rate Pass-Through of RMB by Using Disaggregated Data
- RATE OF OCCURRENCE OF POST-OPERATIVE PULMONARY COMPLICATIONS AFTER CORONARY BYPASS SURGERY
- DETEMINATION OF OCCURRENCE OF ACUTE KIDNEY INJURY IN PATIENTS OF TETANUS ADMITTED IN PEDIATRIC ICU
- TERMINATING THE PROBLEM OF MOSQUITOES IN GAZA STRIP BY USING ALGAE
- PANCREAS SPARING DUODENECTOMY
Last modified: 2019-12-01 19:15:44