Contribution Analysis and Profit Impact
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Executives of Studio Recordings, Inc., produced the latest compact disc by the Starshine Sisters Band titled Sunshine/Moonshine. The following cost information pertains to the new CD:
CD package and disc (direct material and labor) $1.25/CD
Songwriters' royalties $0.35/CD
Recording artists' royalties $1.00/CD
Advertising and promotion $275,000
Studio Recordings, Inc., overhead $250,000
Selling price to CD distributor $9.00/CD
Calculate the necessary CD unit volume to achieve $200,000 profit
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Solution Summary
This solution provides a calculations for the number of necessary units to achieve certain profit.
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The necessary CD unit volume to achieve $200,000 profit
= (Fixed cost+Desired Profit)/ (Sales per unit- variable cost per ...
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