Cool Sphere produces many types of fans, both for commercial and residential use. A model that has proven to be quite popular is the Retractafan. This is a fan with retractable blades and has a LED lamp as well. Michael Fowler, the manager of Cool Sphere, is now looking closely at its production of retractable fans, which included 10,000 units in the prior year.

Capacity to produce 15,000 Retractafan per year

The following table is based on 10,000 units that they produced last year and include $100,000 of allocated fixed manufacturing overhead.

Selling and admin cost: $20 per fan (at sales level of 10,000 units) includes fixed costs of $6 per unit

Selling price per unit Costs per unit: Electric motor Other parts Direct labour ($15/hour) Manufacturing overhead Selling and administrative costs Profit per unit $ 6.00 $ 72.00 8.00 15.00 15.00 20.00 64.00 $ 8.00