Good Deal Electronics, Inc. manufactures two products, DVD Recorders and DVD Players, both on the same assembly line. The predicted sales are 10,000 DVD Recorders and 12,500 DVD Players. The predicted costs for the year 2017 are as follows:
$$\begin{array} { l c c }
&\underline{\text { Variable }}&\underline{\text { Fixed }}\
\text { Materials } & \$ 200,000 & \$ 500,000 \
\text { Other } & 250,000 & 800,000
\end{array}$$ Each product uses 50 percent of the materials costs. Based on manufacturing time, 60 percent of the other costs are assigned to the DVD Recorders, and 40 percent of the other costs are assigned to DVD Players. The management of Good Deal Electronics desires an annual profit of $175,000.
Required:
a. What price should Good Deal Electronics charge for each DVD Recorder if management believes the Recorders should sell for 50 percent more than the DVD Players? (Rounded to 2 decimal places.)
b. What is the total profit per product?
c. Based on your answer to requirement (b), how should the company evaluate the status of the two products?

Question

Good Deal Electronics, Inc. manufactures two products, DVD Recorders and DVD Players, both on the same assembly line. The predicted sales are 10,000 DVD Recorders and 12,500 DVD Players. The predicted costs for the year 2017 are as follows:
 $$\begin{array} { l c c } 
&\underline{\text { Variable }}&\underline{\text { Fixed }}\
\text { Materials } & \$ 200,000 & \$ 500,000 \
\text { Other } & 250,000 & 800,000
\end{array}$$ Each product uses 50 percent of the materials costs. Based on manufacturing time, 60 percent of the other costs are assigned to the DVD Recorders, and 40 percent of the other costs are assigned to DVD Players. The management of Good Deal Electronics desires an annual profit of $175,000.
Required:
a. What price should Good Deal Electronics charge for each DVD Recorder if management believes the Recorders should sell for 50 percent more than the DVD Players? (Rounded to 2 decimal places.)
b. What is the total profit per product?
c. Based on your answer to requirement (b), how should the company evaluate the status of the two products?

Quizplus · Accepted Answer

The Answer of Good Deal Electronics, Inc. manufactures two products, DVD Recorders and DVD Players, both on the same assembly line. The predicted sales are 10,000 DVD Recorders and 12,500 DVD Players. The predicted costs for the year 2017 are as follows:
 $$\begin{array} { l c c } 
&\underline{\text { Variable }}&\underline{\text { Fixed }}\
\text { Materials } & \$ 200,000 & \$ 500,000 \
\text { Other } & 250,000 & 800,000
\end{array}$$ Each product uses 50 percent of the materials costs. Based on manufacturing time, 60 percent of the other costs are assigned to the DVD Recorders, and 40 percent of the other costs are assigned to DVD Players. The management of Good Deal Electronics desires an annual profit of $175,000.
Required:
a. What price should Good Deal Electronics charge for each DVD Recorder if management believes the Recorders should sell for 50 percent more than the DVD Players? (Rounded to 2 decimal places.)
b. What is the total profit per product?
c. Based on your answer to requirement (b), how should the company evaluate the status of the two products?

Good Deal Electronics, Inc Each Product Uses 50 Percent of the Materials Costs