Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Change in Contribution Margin Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating

image text in transcribedimage text in transcribed

Change in Contribution Margin Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 27,100 additional Sun Sound and 29,500 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sun Sound Ear Bling Headphones Headphones Sales price $30.10 $47.00 Variable cost of goods sold (16.90) (26.30) Manufacturing margin $13.20 $20.70 Variable selling and administrative expenses (6.00) (9.40) Contribution margin $7.20 $11.30 Fixed manufacturing costs (2.70) (4.20) Operating income $4.50 $7.10 Prepare an analysis indicating the increase or decrease in total profitability if 27,100 additional Sun Sound and 29,500 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal places. Head Pops Inc. Analysis Sun Sound Ear Bling Headphones Headphones Contribution margin Fixed manufacturing costs Operating income $7.20 $11.30 (2.70) (4.20) $4.50 $7.10 Prepare an analysis indicating the increase or decrease in total profitability if 27,100 additional Sun Sound and 29,500 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal places. Head Pops Inc. Analysis Line Item Description Unit volume increase x Contribution margin per unit Increase in profitability Sun Sound Ear Bling Headphones Headphones

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting An Introduction to Concepts Methods and Uses

Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil

10th Edition

1111822239, 324639767, 9781111822231, 978-0324639766

More Books

Students also viewed these Accounting questions

Question

13-16. Explain in detail each step in a union drive and election.

Answered: 1 week ago

Question

2. Explain how employee engagement may affect unionization.

Answered: 1 week ago