Change in Contribution Margin 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 capa Market research indicates that 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones could be sold. The operating income by unit of product is as follow Sales price Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed manufacturing costs Operating income Sun Sound Ear Bling Headphones Headphones $29.80 $46.50 (16.70) (26.00) $13.10 $20.50 (9.30) $11.20 Head Pops Inc. Analysis (6.00) $7.10 (2.70) $4.40 (4.20) $7.00 Prepare an analysis indicating the increase or decrease in total profitability if 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones are produced and assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal places.
Change in Contribution Margin 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 capa Market research indicates that 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones could be sold. The operating income by unit of product is as follow Sales price Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed manufacturing costs Operating income Sun Sound Ear Bling Headphones Headphones $29.80 $46.50 (16.70) (26.00) $13.10 $20.50 (9.30) $11.20 Head Pops Inc. Analysis (6.00) $7.10 (2.70) $4.40 (4.20) $7.00 Prepare an analysis indicating the increase or decrease in total profitability if 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones are produced and assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Change in Contribution Margin
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 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows:
Sales price
Variable cost of goods sold
Manufacturing margin
Variable selling and administrative expenses
Contribution margin
Fixed manufacturing costs
Operating income
Head Pops Inc.
Analysis
Line Item Description
Unit volume increase
x Contribution margin per unit
Increase in profitability
Sun Sound
Ear Bling
Headphones Headphones
$29.80
$46.50
(16.70)
(26.00)
$13.10
$20.50
(6.00)
$7.10
(2.70)
$4.40
Prepare an analysis indicating the increase or decrease in total profitability if 29,400 additional Sun Sound and 32,300 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.
000
Sun Sound Ear Bling
Headphones Headphones
(9.30)
$11.20
(4.20)
$7.00
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