Business, 21.04.2020 00:36 fermaluis8015

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 28,000 additional Sun Sound and 30,000 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows:

Sun Sound Headphone Ear Bling Headphone
Sales price $140.00 $125.00
Variable cost of goods sold 78.40 70.00
Manufacturing margin $61.60 $55.00
Variable selling and administrative expenses 28.00 25.00
Contribution margin $33.60 $30.00
Fixed manufacturing costs 14.00 12.50
Income from operations $19.60 $17.50

Required:
Prepare an analysis indicating the increase or decrease in total profitability if 28,000 additional Sun Sound and 30,000 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.

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Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and E...

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