A small manufacturer of gas grills is making final changes to its 2009 operating budget and considering several changes in pricing, advertising, and product availability. This short case addresses the topic of contribution analysis as an easy way to analyze profit planning issues such as adding or dropping a product or service; changing a price; adding or decreasing expected volumes; or preparing a profit budget. In this situation there are three products, each with different proportions of variable and fixed costs. The product with the highest profit/unit on a full cost basis has the lowest contribution/unit on a variable cost basis, and vice versa. Four different marketing plans are proposed before one is finally adopted as the plan for the year. At year end, the actual results can be compared to the budget and to a flex or adjusted budget based on the actual product volumes realized. The numbers are simple and the students can readily see the benefit of variable costing.
Since BW Manufacturing, Inc. was founded in 1996, our goal has been to build high-quality, easily serviceable, long-lasting equipment for use by the surface preparation, restoration and maintenance industry. To achieve this goal, which is to offer the best and most efficient systems available for surface preparation, we manufacture all BW Manufacturing equipment in one location, at our facility in Grand Rapids, Michigan, assuring quality control during every step. While contractors continue to face growing concerns regarding a shrinking workforce, tighter production schedules and increasing environmental regulations, along with the fact that paints, coatings, mortars and floor coverings are becoming more difficult to remove or repair, BW Manufacturing along with the cooperation of our worldwide network of dealers and users, will continue to improve our products and introduce new and innovative tools, along with redesigning new accessories for existing surface preparation equipment to increase utilization for use on the next generation of flooring materials.
Our dedicated team strives to be, not only knowledgeable about the surface preparation equipment that we sell, but also understand our customer's needs and requirements. Here at BW Manufacturing, we are willing to prove the value of our equipment through demonstrations before the sale and unprecedented follow up after the sale. With our continued commitment to customer service, and the development of new dependable products, BW Manufacturing, Inc. is positioned to forge ahead, impacting this growing industry. If you are an existing customer, we thank you for your business and look forward to continuing to earn your ongoing business. If you are not a current customer, we welcome the opportunity to demonstrate to you why BW Manufacturing, Inc. is the leader in surface preparation equipment.
We offer a complete line of surface preparation equipment and replacement parts to meet your needs.