Lancer Audio produces a high-end DVD player that sells for $1,300.Total operating expenses for July were as
Question:
Lancer Audio produces a high-end DVD player that sells for $1,300.Total operating expenses for July were as follows:
Units produced and sold 145
Component costs..... $ 68,000
Supplies.......... 2,500
Assembly labor....... 24,650
Rent.......... 2,300
Supervisor salary..... 5,600
Electricity....... 350
Telephone....... 280
Gas........... 300
Shipping......... 2,000
Advertising....... 2,600
Administrative costs... 15,000
Total.........$123,580
Required
a. Use account analysis to determine fixed cost per month and variable cost per DVD player.
b. Project total cost for August assuming production and sales of 165 units.
c. What is the contribution margin per DVD player?
d. Estimate total profit assuming production and sales of 165 units.
e. Lancer Audio is considering an order for 120 DVD players, to be produced in the next 10 months, from a customer in Canada. The selling price will be $950 per unit (well under the normal selling price).However, the Lancer Audio brand name will not be attached to the product.
What will be the impact on company profit associated with this order?
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
a Variable costs Component costs 68000 Supplies 2500 Assembly labor 24650 Shipping 2000 Total 97150 ...View the full answer
