Quality Data manufactures two products, CDs and DVDs, both on the same assembly
ID: 2472962 • Letter: Q
Question
Quality Data manufactures two products, CDs and DVDs, both on the same assembly lines and packaged 10 disks per pack. The predicted sales are 400,000 packs of CDs and 500,000 packs of DVDs. The predicted costs for the year 2009 are as follows:
Each product uses 50 percent of the materials costs. Based on manufacturing time, 40 percent of the other costs are assigned to the CDs, and 60 percent of the other costs are assigned to the DVDs. The management of Quality Data desires an annual profit of $50,000.
(a) What price should Quality Data charge for each disk pack if management believes the DVDs sell for 20 percent more than the CDs? Round answers to the nearest cent.
CDs $Answer
DVDs $Answer
(b) What is the total profit per product using the selling prices determined in part (a)? Use negative signs with answers, if appropriate.
CDs $Answer
DVDs $Answer
Explanation / Answer
Let sales price for CD to be x
(400000x + 500000 * 1.2X) - 550000 - 1200000 => 50000
1000000x -1750000 = 50000
x => 1800000 / 1000000 => 1.8 per unit
CD selling price per unit => $1.8
Price Of Dvd => 1.8 +20% => $2.16 per unit
Answer b
Total Profit => -120000 +170000 => $50000
Particulars CD's DVD's Sales 720000 1080000 Variable Expeses: Material 100000 100000 Other 140000 210000 Profit 480000 770000 Less : Fixed Cost 600000 600000 Total Profit -120000 170000