Sufficient capacity for the additional production

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Reference no: EM131288192

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 20,000 additional Sun Sound and 40,000 additional Ear Bling headphones could be sold. The income from operations by unit of product is as follows: 1 Sun Sound Headphone Ear Bling Headphone 2 Sales price $155.00 $135.00 3 Variable cost of goods sold 74.40 55.00 4 Manufacturing margin $80.60 $80.00 5 Variable selling and administrative expenses 24.00 26.00 6 Contribution margin $56.60 $54.00 7 Fixed manufacturing costs 18.00 12.00 8 Income from operations $38.60 $42.00 Prepare an analysis indicating the increase or decrease in total profitability if 20,000 additional Sun Sound and 40,000 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.

Reference no: EM131288192

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