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Question - Futaba photo shop has three services, print, enlargement, and 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 selling price as variable advertising expenses. Fixed cost for the shop is $129,320. The following information related to these three services is 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
Required -
1. Determine the contribution margin per unit of each product.
2. Compute the breakeven point volume for each service. Present supporting calculations
3. What is the total sales units required to earn profit of $252,000 on after tax, the above assumption and a tax rate of 40%?
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