Lancer Audio produces a high-end DVD player that sells for $1,300. Total operating expenses for July were as follows:
|
Units produced and sold |
145 |
|
Component costs |
68,000 |
|
Supplies |
2,500 |
|
Assembly labor |
24,650 |
|
Supervisor salary |
5,600 |
|
Electricity |
350 |
|
Telephone |
280 |
|
Gas |
300 |
|
Shipping |
2,000 |
|
Advertising |
2,600 |
|
Administrative costs |
15,000 |
|
Total |
$123,580 |
Required
a. Use account analysis to determine fixed cost per month and variable cost per DVD player.
b. Project total cost for August assuming production and sales of 165 units.
c. What is the contribution margin per DVD player?
d. Estimate total profit assuming production and sales of 165 units.
e. Lancer Audio is considering an order for 120 DVD players, to be produced in the next 10 months, from a customer in Canada. The selling price will be $950 per unit (well under the normal selling price). However, the Lancer Audio brand name will not be attached to the product. What will be the impact on company profit associated with this order?