Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 29

Durant Co. manufactures glass bottles for dairy products. The contribution margin is $0.10 per bottle. Durant just received notification that one of their orders for 100,000 bottles contained misprinted labels, and thus had to recall and reprint the bottle labels. If it will cost $0.05 per bottle to reprint the labels and $1,000 to reship the bottles, what will the net contribution margin be after the recall?

Step 1 of 2

Net contribution margin: Net contribution margin is the difference between the actual contribution margin and the excess cost incurred due to some reason.