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1 . Executives of Studio Recordings, produced the latest compact disc by the Starline Sisters Band, titled Sunshine / Moonshine . The following cost infor
Executives of Studio Recordings, produced the latest compact disc by the Starline Sisters Band, titled SunshineMoonshine The following cost information pertains to the new CD:
CD package and disc direct material and labor
$CD
Songwriters' royalties
CD
Recording artists' royalties
$CO
Advertising and promotion
Studio Recordings, Inc.s overhead
Selling price to CD distributor
$
Calculate the following:
Contribution per CD unit
Breakeven volume in CD units and dollars
Net profit if million CDs are sold
Necessary CD unit volume to achieve a $ profit
Video Concepts, Inc. VCI markets video equipment and film through a variety of retail outlets. Presently, VCI is faced with a decision as to whether it should obtain the distribution rights to an unreleased film titled Touch of Orange. If this film is distributed by VCI directly to large retailers. VCI estimates the total market for the film to be units. Other data available are as follows:
Cost of distribution rights for film
$
Label design
Package design
Advertising
Reproduction of copies per
Manufacture of labels and packaging per
Royalties per
VCI's suggested retail price for the film is $ per unit, and the retailer's margin is percent.
What is VCI's unit contribution and contribution margin?
What is the breakeven point in units? In dollars?
What share of the market would the film have to achieve to earn a percent return on VCI's investment in the first year?
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