Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 20,000 additional Sun Sound and 40,000 additional Ear Bling headphones could be sold. The income from operations by unit of product is as follows:

1

Sun Sound Headphone

Ear Bling Headphone

2

Sales price

$155.00

$135.00

3

Variable cost of goods sold

74.40

55.00

4

Manufacturing margin

$80.60

$80.00

5

Variable selling and administrative expenses

24.00

26.00

6

Contribution margin

$56.60

$54.00

7

Fixed manufacturing costs

18.00

12.00

8

Income from operations

$38.60

$42.00

Prepare an analysis indicating the increase or decrease in total profitability if 20,000 additional Sun Sound and 40,000 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.

Profitability Analysis

Prepare an analysis indicating the increase or decrease in total profitability if 20,000 additional Sun Sound and 40,000 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.

Sun Sound Headphone Ear Bling Headphone
$ $
$ $

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_2

Step: 3

blur-text-image_3

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

Auditing Fundamentals In A South African Context

Authors: Gerrit Penning, Rika Butler, Pieter Von Wielligh, Frans Prinsloo

2nd Edition

0190749040, 978-0190749040

More Books

Students also viewed these Accounting questions