Essay About Cd Unit And Total Variable Cost

Financial Exercise
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Calculate the contribution per CD unit
Selling price to CD distributor
$9.00
Less: Variable cost
CD Package and disk (direct material/labor) $1.25/unit
Songwriters royalties $0.35/unit
Recording artists royalties
$1.00/unit
Total variable cost
Contribution per CD unit
$6.40
Calculate the break-even volume in CD units and dollars
Total Fixed Cost: Advertising and promotion
$275,000
Studio Recordings, Inc. overhead
250,000
Total
$525,000
Contribution per CD unit (from #1 above)
$6.40
Contribution margin
($9.00-$2.60)/$9.00=.711 or 71.1%
$525,000
Break-even volume in units = $6.40 = 82,031.25 units
$525,000
Break-even volume in dollars = .711 ice to CD distributor
$9.00
Less: Variable cost
CD Package and disk (direct material/labor) $1.25/unit
Songwriter’s royalties $0.35/unit
Recording artists’ royalties
$1.00/unit
Total variable cost
Contribution per CD unit
$6.40
Calculate the break-even volume in CD units and dollars
Total Fixed Cost: Advertising and promotion
$275,000
Studio Recordings, Inc. overhead
250,000
Total
$525,000
Contribution per CD unit (from #1 above)
$6.40
Contribution margin
($9.00-$2.60)/$9.00=.711 or 71.1%
$525,000
Break-even volume in units = $6.40 = 82,031.25 units
$525,000
Break-even volume in dollars = .711 = $738,396.62