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SHOW WORK FOR FULL CREDIT IF YOU WANT A THUMBS UP Question 5 (15 points) Executives at Studio Recordings, Inc. produced the latest compact disc
SHOW WORK FOR FULL CREDIT IF YOU WANT A THUMBS UP
Question 5 (15 points) Executives at Studio Recordings, Inc. produced the latest compact disc the Starshine Sisters Band, titled Sunshine/Moonshine. The following cost information pertains to the new CD. CD package and disc (direct materials and labor) $1.25/CD Songwriters' royalties $0.35/CD Recording artists' royalties $1.00/CD Advertising and promotion $275,000 $250,000 Studio Recordings, Inc.'s overhead Selling price to CD distributor $9.00 Calculate the following: a) Contribution per CD (1 point) b) Break-even volume in CD units (2 points) c) Break-even volume in dollars (2 points) d) Net profit if 1 million CDs are sold (2 points) [NOTE: Net profit = Total revenue - Total costs] e) Necessary CD volume to achieve $200,000 profit (2 points) Calculate the following if the selling price is cut by 15%: f) Break-even volume in CD units (2 points) g) Break-even volume in dollars (2 points) h) Necessary CD volume to achieve $200,000 profit (2 points)Step by Step Solution
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