Change in Contribution Margin 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 30,600 additional Sun Sound and 34,000 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sun Sound Ear Bling Headphones Headphones Sales price $31.60 $49.30 Variable cost of goods sold (17.70) (27.60) Manufacturing margin $13.90 $21.70 Variable selling and administrative expenses (6.30) (9.90) Contribution margin $7.60 $11.80 Fixed manufacturing costs (2.80) (4.40) Operating income $4.80 $7.40 Prepare an analysis indicating the increase or decrease in total profitability if 30,600 additional Sun Sound and 34,000 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal places. Head Pops Inc. Analysis Sun Sound Ear Bling Headphones Headphones Line Item Description Unit volume increase × Contribution margin per unit $ Increase in profitability
Change in Contribution Margin 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 30,600 additional Sun Sound and 34,000 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sun Sound Ear Bling Headphones Headphones Sales price $31.60 $49.30 Variable cost of goods sold (17.70) (27.60) Manufacturing margin $13.90 $21.70 Variable selling and administrative expenses (6.30) (9.90) Contribution margin $7.60 $11.80 Fixed manufacturing costs (2.80) (4.40) Operating income $4.80 $7.40 Prepare an analysis indicating the increase or decrease in total profitability if 30,600 additional Sun Sound and 34,000 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal places. Head Pops Inc. Analysis Sun Sound Ear Bling Headphones Headphones Line Item Description Unit volume increase × Contribution margin per unit $ Increase in profitability
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 19E
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