Symphony Sound is designing a portable recording studio to be sold to consumers. The team developing the product includes representatives from marketing, engineering, and cost accounting. The recording studio will include sound-canceling monitor headphones, audio recording and enhancement software, several instrumental and vocal microphones, and portable folding acoustic panels. With this set of features, the team believes that a price of $4,420 will be attractive in the market place. Symphony Sound seeks to earn a per unit profit of 25 percent of selling price.

(a)

Calculate the target cost per unit.

Target cost $ ____3315____

(b)

The team has estimated that the fixed production costs associated with the product will be $1,658,500, and variable costs to produce and sell the item will be $2,695 per unit. In light of this, how many units must be produced and sold to meet the target cost per unit?

Units produced and sold ____2675____

(c)

Suppose the company decides that only 1,825 units can be sold at a price of $4,420 and, therefore, the target cost cannot be reached. The company is considering dropping the folding acoustic panels, which add $670 of variable cost per unit. With this feature dropped, the company believes it can sell 2,700 units at $4,200 per unit. Will Symphony Sound be able to produce the item at the new target cost or less? (Round answers to 0 decimal places, e.g. 125.)

New target cost per unit

$ ____?____

New cost per unit

$ ____?____

Symphony Sound will be able to produce the item at ___________?____________ (less than the new target cost -OR- the new target cost) .