Executives of Studio Recordings, INC produced the latest compact disc by the Sta

Question

Executives of Studio Recordings, INC produced the latest compact disc by the Starshine Sisters Band, titled Sunshine.Moonshine. The Following cost information pertains. to the new cd:

CD Package and Disc $1.25/cd
Songwriters Royalties $0.35/cd
Recording Artists Royalties $1.00/cd
Ad and Promotion $275,000
Studio Recording Inc Overhead $250,000
Selling Price to CD Distributor $9.00


Calculate the necessary CD Unit Volume To Achieve a $200,000 profit...


Please answer in excel(if possible) and step by step thanks. Need this by P.M

Explanation / Answer

a. Retail price per unit $9.00 -Variable cost per unit $2.60 ($1.25 CD package + Royalties 0.35 + 1.00) =Contribution per CD unit $6.40 b. Break-even point in units = total fixed costs / contribution per unit = (275,000 advertising + 250,000 overhead) / $6.40 = 525,000 / 6.40 = 82,031.25 or 82,032 units rounded up. Break-even point in dollars = breakeven point in units x sales price per unit = 82,032 x $9 = $738,288. c. 1,000,000 x $6.40 contribution per unit = $6,400,000 total contribution - $525,000 fixed costs = $5,875,000 net profit if 1 million CD's are sold. d. $200,000 profit desired / $6.40 contribution per unit = 31,250 units must be sold above breakeven units. So 82,032 + 31,250 = 113,282 CDs must be sold.

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