Futaba photo shop has three services, print, enlargement, frame.The shop owner thinks these two services can be sold as a bundle,Print 3, Enlarge 4 and Frame 1. The company spends 10% of sellingprice as variable advertising expenses. Fixed cost for the shop is$129,320. The following information related to these three servicesis given.
| | Print | Enlarge | Frame |
Selling price | | 0.8 | 1.2 | 4.5 |
Direct material and labor costs per unit | | 0.17 | 0.31 | 1.8 |
Variable manufacturing costs | | 0.10 | 0.22 | 0.5 |
Expected sales units | 45,000 | 60,000 | 15,000 |
Determine the contribution margin perunit of each product
Compute the breakeven point volume foreach service. Present supporting calculations
What is the total sales units requiredto earn profit of $252,000 on after tax, the above assumption and atax rate of 40%?
