This week in the live session we will look at something called the contribution margin. This is a widely used concept for those of you in accounting and finance. The contribution margin (P – MC) or (P – AVC), is also sometimes represented as percent contribution margin is (P-MC)/P or (P-AVC)/P where:
P is the price charged for one unit of an item, and;
MC is the marginal cost or AVC is the average variable cost measures the cost of making one item.
Marginal cost and Average variable cost are not always the same, but for this equation either can be used. The choice of which to use usually is driven by what data is available.
Let’s focus on the heart of this equation (P-AVC). The equations show the spread between the price, P, at which we sell an item, and the MC or the AVC shows the cost of making one item. That spread is the net profit per unit. It represents a net gain from the sale of one more unit. Now, when economies of scale or economies of scope increase, both have the same effect, and cost decreases. The spread, the gain from selling each unit increases, and the marginal profit rate increases. But when there are decreases in economies of scale or scope, the spread between price and MC and AVC narrows. Net profits per unit fall.
The contribution margin shows how profits expand and contract as costs change. Both economies of scale and scope change costs, but they do so through different processes. Can you explain that difference? It is a tricky idea, but understanding the difference is one way to think about how to engineer new business opportunities.
Feeling challenged by the discussion? Just try the discussion preparation to help.
The focus of this discussion is on understanding the differences between economies of scale and economies of scope. What are the key differences? Use these concepts to determine whether gains from economies of scale or gains from economies of scope were the principal reason behind a merger or acquisition.
Also, see the help provided in the discussion preparation.
Select one of the mergers and acquisitions below. Consider whether the merger/acquisition was about scope or scale economies.
Sirius XM acquired Pandora.
The acquisition of Credit Karma by Intuit.
The merger of Strayer University and Capella University formed SEI.
For your chosen case, address the following in your discussion post:
Explain how economies of scale and scope differ.
Describe how growth in the case you selected is created from either an economy of scope or scale.
To earn full credit for your discussion, you must complete one post and one follow-up or reply to a classmate. Make sure both the post and the reply focus on the questions asked.
Read The Big Deal in Amazon’s Antitrust Case. Then answer the following prompt, based on the first letter of your first name:
Prompt 1 – A – M
What kind of conduct that Amazon might engage in would worry you as a consumer? Explain how this ties into Microeconomics.
Prompt 2 – N – Z
What restrictions on Amazon’s behavior do you think government regulators should impose? Explain how this ties into Microeconomics.
Using the balance sheet your company (Palantir) found in the Annual Report, provide a couple of sentences of context for your posting (define terms/comment on trends/compare to rivals)
What is the $ value of working capital?
I just need 70 words for this assignment
Identify a good and a service that you have used that you believe are complements of one another. Why do you think the good and service complement each other? Your journal entry must be at least 200 words in length. No references or citations are necessary
Using the balance sheet provided answer the following questions:
Give the definition of a liability and describe a liability for the company on the balance sheet.
What is $ value of total assets? Did they increase or decrease from the previous year?
Please find an online article that explains and informs about the challenge and solution to a business problem. The article must focus on using and applying DATA (quantitative) to solve a business problem.
The article can be a journal article or a leading newspaper (for example, The New York Times, or The Washington Post).
Please summarize the online article with the following structure and a word limit of 500 in three to four paragraphs.
1. What is the business problem/challenge mentioned in the article?
2. How has data been used to identify or analyze the problem?
3. What is the solution provided in the article?
4. Please provide a reference of the article using APA style.
Below is the Grading rubric, and the assignment score is in parentheses.
Identification of business problem/challenge
Quality of English writing
APA reference and quality of research
The student has identified the problem clearly and articulated it in writing.
The English writing is grammatically correct and formatted. There is an opening statement in each paragraph supported by facts and evidence.
The writing provides evidence of research. And APA reference is correctly formatted.
Short Answer. 250-300 words minimum. Quality Work. no plagiarism. See attached document for instructions. Due by 7pm EST on September 1, 2022.
Using APA style. Write 250-300 words. Use the basic debate form below to respond questions below.
The proposition set forth is this: “The United States Supreme Court powers are appropriate and essential. No other legal form or entity could exist superior to our system.” “No other legal form or entity could exist superior to our system”
In your discussion affirm or oppose the proposition.
Business Law and the Legal Environment, Standard Edition 8th Edition
by Jeffrey F. Beatty (Author), Susan S. Samuelson (Author), Patricia Abril (Author)
Using the midpoints formula presented in the textbook, calculate the price elasticity coefficient for each price level, starting with the coefficient for the $4 to $6 level. For each coefficient, indicate each type of elasticity: elastic demand, inelastic demand, or unitary demand.