Lancer Audio produces a high end DVD player that sells for $1,250. Total operating expenses for July were as follows:
Units produced and sold 140
Component cost $67,000
Supplies 1,680
Assembly Labor 23,500
Rent 2,200
Supervisory salary 5,500
Electricity 250
Telephone 180
Gas 200
Shipping 1,540
Advertising 2,500
Administrative Costs 14,500
Total $119,050
Required:
A. Use account analysis to determine fixed cost per month and variable cost per DVD player.
B. Project total cost for August assuming production and sales of 160 units.
C. What is the contribution margin per DVD player?
D. Estimate total profit assuming production and sales of 160 units.
E. Lancer Audio is considering an order for 100 DVD players, to be produced in the next 10 months, from a customer in Canada. The selling price will be $900 per unit (well under the normal selling price). However, the Lancer Audio brand name will be attached to the product. What will be the impact on company profit associated with this order?