The Superior Jump drive Company sells jump drives for $10 each. Manufacturing cost is $2.60 per jump drive; marketing costs are $2.40 per jump drive; and royalty payments are 20% of the selling price. The fixed cost of preparing the jump drive is $18 000. Capacity is 15 000 jump drives.
(a) Compute
(i) The contribution margin;
(ii) The contribution rate.
(b) Compute the break-even point
(i) In units;
(ii) In dollars;
(iii) As a percent of capacity.
(c) Draw a detailed break-even chart.
(d) Determine the break-even point in units if fixed costs are increased by $1600, while manufacturing cost is reduced by $0.50 per jump drive.
(e) Determine the break-even point in units if the selling price is increased by 10%, while fixed costs are increased by $2900.