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Garmin Ltd. manufactures two types of GPS devices, ( GPSMAP 64 ) and ( GPSMAP 78 ).The costs for the products are shown herebelow: (GPSMAP
Garmin Ltd. manufactures two types of GPS devices, (GPSMAP 64) and (GPSMAP 78).The costs for the products are shown herebelow:
| (GPSMAP 64) | (GPSMAP 78) |
Units sold | 900 | 1,600 |
Unit sales price | $290 | $170 |
Variable cost per unit Raw material Labor |
$75 $64 |
$60 $48 |
Total fixed costs = $50,000 |
Required:
- Compute the contribution margin per unit for each of the twp products, GPSMAP 64 and 78.
- Assuming the fixed costs are allocated based on the units produced. Compute the selling price per unit of each product to achieve a profit margin of 35%.
- Assume that Garmin has a maximum working labor capacity of 2,940 labor hours. Labour hours are paid at a rate of $32 per hour. Which of the two products, (GPSMAP 64) or (GPSMAP 78) is most profitable for Garmin Ltd? Show your calculations
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