Question
Samsung offers extended service contracts that provide repair coverage for its products. Assume Samsung charges $160 to repair a phone screen and $400 for other
Samsung offers extended service contracts that provide repair coverage for its products. Assume Samsung charges $160 to repair a phone screen and $400 for other repairs. Services are provided in a ratio of 2 screens to 1 other repair (2:1). Variable costs are 40% of selling price for Samsung screen repairs and 48% of selling price for other repairs. Assume fixed costs are $2 billion per year for the repair service department.
1. Compute the selling price per composite unit for Samsung's repair services.
2. Compute the variable cost per composite unit for Samsung's repair's services.
3.How many composite units must Samsung's repair service department sell each year to break even.
4. At the breakeven level, how many screen repairs and other repairs will Samsung complete each year.
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