disk (direct material/labor) $1.25/unit Songwriter’s royalties $0.35/unit Recording artists’ royalties $1.00/unit Total variable cost 2.60 Contribution per CD unit $6.40 2. Calculate the break-even volume in CD units and dollars Total Fixed Cost: Advertising and promotion $275,000 Studio Recordings, Inc. overhead 250,000 Total $525,000 Contribution per CD unit (from #1 above) $6.40 Contribution margin ($9.00-$2.60)/$9.00=.711 or 71.1% $525,000
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must be able at least to sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. Further, it will not make a profit unless it covers the fixed costs as well. The level of operation at which total costs are just covered is the break-even volume. This should be the lower limit in all our planning. The accounting records
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the costs of producing each bale if total costs aren’t taken into account. Basing the overhead costs on a percentage of direct labor vastly understates overhead for the purchased bales, since a larger percentage of the total cost is the cost to purchase paper. Since the cost of purchasing paper is collected at the divisional level, it isn’t considered in this calculation. Taking a total of the depot and divisional overhead values and dividing them by the total number of bales produced and adding
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Case Analysis: Alpen Bank The main issue that Alpen bank is facing is whether or not they should launch the credit card business in the Romania market and which group of target audience they should select while applying the launching strategy. Moreover, specifically to Carle, he needs to come up with a program from which, Alpen bank can generate at least €5 million in profit within 2 years. Moreover, clarified positioning strategy and customer segmentation is also needed to secure the success of
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Table of Contents 1. The Raymond Group – An Introduction.............................................................................2 2. Applications ........................................................................................................................5 2.1. FLUCTUATIONS IN RAW MATERIAL PRICES..................................................5 2.2. DECISION REGARDING LOCATION...................................................................7 2.3. Fixing of SALE price using
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sales (30%) 36,000 42,000 57,000 63,000 69,000 69,000 Collections 40% (month after credit sales) 33,600 39,200 53,200 58,800 64,400 Collections 60% (two months after credit sales) 50,400 58,800 79,800 88,200 Total
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sales promotions are not tied to current levels of work. Our analysis begins with careful inspection of the variable and fixed costs of Salem Data Services. It is clear the variable costs equaling $32,640, do not contribute enough to covering the total fixed costs of $189,620. The other focus of the analysis lies in the re-evaluating the usage hours available for Commercial Sales. Currently the level of Commercial Sales is under utilized. Available hours need to be maximized to eliminate the
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Pricing and Breakeven Analysis Assignment (Group Case Asignment # 2) Due at the beginning of class on March 16, 2009 This assignment is based on the Optical Distortion Case Assignment: Please complete a Pricing analysis and offer a final recommended price for the ODI lens. At the end of this assignment you need to have a balanced, well analysed and supported recommendation for the price that ODI should charge per lens. You will need to use all three pricing orientations (Cost/Profit
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• He has assumed that there is just one breakeven point for the firm (by taking the average of the 3 products) • He has also assumed that the sales mix will remain constant • He has also assumed that the sales mix will remain constant. Total revenue and total expenses behave in a linear manner over the relevant range • Since the capacity is being expanded to increase production of Product C, it could be assumed that this increase should be allocated to this product. Production of Product A is
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objective of Break-Even Analysis is to establish what will happen to the financial results if a specified level of activity or volume fluctuates. This information is vital to management, as one of the most important variables influencing total sales revenue, total costs and profits is output or volume. Break-Even Analysis is based on the relationship between sales revenue, costs and profit in the short run. The short run being a period in which the output of the firm is restricted to that available
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