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Active Life manufactures wearable technology for a variety of purposes. The Athletics Division produces three models of a watch that monitors heart rate, steps
Active Life manufactures wearable technology for a variety of purposes. The Athletics Division produces three models of a watch that monitors heart rate, steps taken, calories burned, distance covered, and other metrics related to personal health. Data for the three models are shown below: Selling price per watch Variable expenses per watch: Production Sales commissions Total variable expenses Contribution margin per watch: The Athletics Division has the following fixed costs: Fixed production costs Advertising expense Administrative salaries Total Basic Advanced Elite $ 160.00 $240.00 $360.00 88.00 108.00 126.00 32.00 24.00 36.00 120.00 132.00 162.00 $ 40.00 $108.00 $198.00 Per Month $ 180,000 150,000 78,000 $ 408,000 Sales, in units, over the past two months are shown below. The increased in total watches sold is attributable to a special advertising campaign focused on the Basic model. The manager of the Athletics Division believed there was an opportunity to boost sales for that model during the busy holiday season. The one-time advertising campaign in December cost $10,000. Page 130
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