Hey Chegg, I am having trouble with this problem. Can you please show me how you
ID: 2482450 • Letter: H
Question
Hey Chegg, I am having trouble with this problem. Can you please show me how you arrive at your answers.
Product Pricing: Two Products
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? Rounds 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
Answer to Point no (a)
Let selling price per pack OF CD be P.
and selling price per pack OF DVD be 1.2P.
So 400,000*P+500,000*1.2P=17,00,000
=>10,00,000*P=17,00,000
=>P=$1.7 PER CD PACK.
Price per DVD PACK=$1.7*1.2=$2.04.
CD $ 1.7 PER PACK.
DVD $2.04 PER PACK.
Answer to point no.(b)
Profit CD from $-60,000
Profit from DVD $110,000
Total proft $50,000.
Particulars Value Variable cost 350,000 Fixed Cost 1,300,000 Profit 50,000 Sales 1,700,000