Question
Pricing Assessment 10S-2. Executives of Studio Recordings Inc. produced the latest compact disc by the Starshine Sisters Band, titled Sunshine/Moonshine. The following cost information In
Pricing Assessment
10S-2. Executives of Studio Recordings Inc. produced the latest compact disc by the Starshine Sisters Band, titled Sunshine/Moonshine. The following cost information In Table 1 pertains to the CD:
Table 1
CD Information | Cost |
| $1.30/CD |
| $0.40/CD |
| $1.10/CD |
| $280,000 |
| $260,000 |
| $9.25 |
- Calculate the following figures and complete the Table 2 below for Question 1:
- Contribution per CD unit
- Break-even volume in CD units and dollars
- Net profit if one million CDs are sold
- Necessary CD unit volume to achieve a $200,000 profit
- Recalculate the four figures for a situation in which the selling price to the CD distributor is dropped to $8.00 and complete Table 2 for Question
- Recalculate the four figures for a situation in which Studio Recording Inc.s overhead is reduced to $175,000 and complete Table 2 for Question
Table 2
| Question 1 | Question 2 | Question 3 |
| Enter figure | Enter figure | Enter figure |
| Enter figure | Enter figure | Enter figure |
| Enter figure | Enter figure | Enter figure |
| Enter figure | Enter figure | Enter figure |
- If you were tasked to produce $300,000 minimum in profit, what would your pricing recommendation be? Consider the ethical considerations of your decision. Support your recommendation in one to two paragraphs and complete Table 3 with your new recommendations.
Supporting paragraph(s):
Table 3
Type of Cost | Actual Cost | New Recommendation |
| $1.30 per CD | To be completed by student |
| $0.40 per CD | To be completed by student |
| $1.10 per CD | To be completed by student |
| $280,000 | To be completed by student |
| $260,000 | To be completed by student |
| $9.25 | To be completed by student |
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