Reference no: EM132528669
Selling price per unit (package of 2 CDs)......................................$25.00
Variable costs per unit:
Direct material...............................................................................................................$6.00
Direct labor......................................................................................................................$5.00
Artist's royalties..............................................................................................................$4.50
Manufacturing overhead..........................................................................................$3.00
Selling expenses............................................................................................................$1.30
Total variable costs per unit............................................................$19.80
Annual fixed costs:
Manufacturing overhead..........................................................................................$192,000
Selling and administrative.......................................................................................$276,000
Total fixed costs................................................................................$468,000
Forecasted annual sales volume (120,000 units).........................$3,000,000
Question 1: If the company's direct-labor costs do increase by 8%, what selling price per unit of product must it charge to maintain the same contribution margin ratio?
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