Prepare an analysis indicating the increase or decrease in total profitability if 33,600 additional Sun Sound and 36,600 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 place.
Change in Sales Mix and 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.
| Sun Sound Headphones |
Ear Bling Headphones |
|||
| Sales price | $34.10 | $53.20 | ||
| Variable cost of goods sold | 19.10 | 29.80 | ||
| Manufacturing margin | $15.00 | $23.40 | ||
| Variable selling and administrative expenses | 6.80 | 10.60 | ||
| Contribution margin | $8.20 | $12.80 | ||
| Fixed |
3.10 | 4.80 | ||
| Income from operations | $5.10 | $8.00 |
Prepare an analysis indicating the increase or decrease in total profitability if 33,600 additional Sun Sound and 36,600 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 place.
| Head Pops Inc. | ||
| Analysis | ||
| Sun Sound Headphones | Ear Bling Headphones | |
| Unit volume increase | ||
| x Contribution margin per unit | $ | $ |
| Increase in profitability |
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