Proof Designs

The partners of a small jewelry design company have decisions to make regarding distribution alternatives for their products. Students are asked to: 1) identify those items relevant to the decision and categorize them as investment, fixed costs, or variables; 2) calculate the unit contribution and contribution margin for each necklace and earring set at both wholesale and retail selling price points; 3) calculate the weighted-average-contribution margin for each of the two product lines; 4) perform a breakeven analysis and identify what information would be useful in the interpretation of these breakeven levels and 6) project the profitability of both distribution strategies and perform sensitivity analysis around the expected sales levels.