Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 28,000 additional Sun Sound and 30,000 additional Ear Bling headphones could be sold. The income from operations by unit of product is as follows: Ear Bling Headphones Sun Sound Headphones Sales price $140.00 $125.00 Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses.. Contribution margin... Fixed manufacturing costs. 78.40 70.00 $ 61.60 $ 55.00 28.00 25.00 $ 33.60 $ 30.00 14.00 12.50 Income from operations $ 19.60 $ 17.50 Prepare an analysis indicating the increase or decrease in total profitability if 28,000 additional Sun Sound and 30,000 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production.
Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 28,000 additional Sun Sound and 30,000 additional Ear Bling headphones could be sold. The income from operations by unit of product is as follows: Ear Bling Headphones Sun Sound Headphones Sales price $140.00 $125.00 Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses.. Contribution margin... Fixed manufacturing costs. 78.40 70.00 $ 61.60 $ 55.00 28.00 25.00 $ 33.60 $ 30.00 14.00 12.50 Income from operations $ 19.60 $ 17.50 Prepare an analysis indicating the increase or decrease in total profitability if 28,000 additional Sun Sound and 30,000 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 16E
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