what is the correct contribution margin, marginal revenue and marginal cost

Class Notes:
is she using it correctly?

what problem might there be? new customers column isnt adding up to the chart given (add up columns to figure out then calculate the difference in each column and that will show how many additional customers at that time and check with her number) it should be wrong, her analysis is flawed

for marginal revenue she used additional revenue per customer x by # of customers (ex $7 x 10 = $70)

actually calculate it by adding up all purchase revenue and get the mean and add up all purchase costs and get mean then subtract the two. then put this info into the chart where you multiply it by the new customers (attachment 3) MC^2 #’s should be pretty constant because its including electricity and things like that, added profit per day x by 360 in order to get the profit per year

I was assigned question #3

Q. 3.Is Aimee using marginal cost and marginal revenue correctly in her analysis? Explain the errors in her analysis, if any. [Hint: Think about Bruce Morgan’s questions.]

I needed you to do was the correct calculations since what was was done originally on the case text was wrong cause didn’t do it right

20191121085401case_questions___vines_street (1)

Solution Preview

Vines Street
Marginal cost and marginal revenue work in correlation. Marginal cost is the expense incurred in producing an extra unit of a product. Marginal revenue is the extra income generated after the last extra unit has been sold. Aimee Novak suggested in the memorandum that the closing hours of the vines street be extended. From her research, she realised a profit of around $40,000 if the closing hours would be extended from 3AM to 4AM.

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