Video Concepts, Inc. (VCI) manufactures a line of digital cameras that are distributed to large retailers....

Video Concepts, Inc. (VCI) manufactures a line of digital cameras that are distributed to large retailers. The line consists of three models. The following data are available regarding the models:

Model	Selling Price per unit	Variable Cost per unit	Demand/Year (units)
Model LX1	$175	$100	2,000
Model LX2	$250	$125	1,000
Model LX3	$300	$140	500

VCI is considering the addition of the fourth model to its line (LX4). The model would be sold to retailers for $375. The variable cost of this unit is $225. The demand for the new model LX4 is estimated to be 300 units per year. HOWEVER, with the new model, the original three models will see a reduction in demand. Demand for LX1 will drop 1%, demand for LX2 will drop 5% and demand for LX3 will drop 20%. VCI will incur a fixed cost of $20,000 to add the new model to the line. Calculate the following to help with your conclusion.

What is the total Gross Profit Margin for VCI without LX4? HINT: Calculate GPM for each model and add them together.
What is the Gross Profit Margin for models LX1-2-3 with the given reductions in sales from the introduction of LX4?
What is the Gross Profit Margin for LX4?
How does this compare to the current situation? Based on your answers for parts a, b and c, should VCI add the new Model LX4 to its line of digital cameras (HINT: Don’t forget to include the $20,000 fixed cost for the introduction of LX4)? Why or why not?

Expert Solution

Answer is attached below

Please rate my answer

ekkarill92 answered 2 years ago

Video Concepts, Inc. (VCI) manufactures a line of videocassette recorders (VCRs) that are distributed to large...

Video Concepts, Inc. (VCI) manufactures a line of videocassette recorders (VCRs) that are distributed to large retailers. The line consists of three models of VCRs. The following data are available regarding the models: Model VCR Selling Price per Unit Variable Cost per Unit Demand/Year (units) Model LX1 $175 $100 2,000 Model LX2 $250 $125 1,000 Model LX3 $300 $140 500 VCI is considering the addition of a fourth model to its line of VCRs: This model would be sold to...

Hawkins Audio Video, Inc. manufactures digital cameras. Hawkins is considering whether it should outsource production of...

Hawkins Audio Video, Inc. manufactures digital cameras. Hawkins is considering whether it should outsource production of a part used in the manufacturing of its cameras. 50,000 units of the part were made by Hawkins last year. At this production level, the company incurred the following direct product costs: Direct Materials $250,000 Direct Labor $104,000 Manufacturing Overhead incurred during the same period for production of the part is represented by the following cost behavior equation: y = $0.10x + $50,000. If...

Digital Eye must design an assembly line to produce a new line of slim digital cameras....

Digital Eye must design an assembly line to produce a new line of slim digital cameras. Assembling a single camera requires the completion of nine distinct tasks, and information about each of these tasks is provided below: Task Immediate Predecessors Task Duration (Seconds) A None 20 B A 15 C A 20 D B 12 E B 8 F B 15 G D,E 30 H C,F 25 I G,H 9 This assembly line will operate 8 hours a day to...

A company that manufactures video cameras produces a basic model and a deluxe model. Over the...

A company that manufactures video cameras produces a basic model and a deluxe model. Over the past year, 32% of the cameras sold have been of the basic model. Of those buying the basic model, 35% purchase an extended warranty, whereas 46% of all deluxe purchasers do so. If you learn that a randomly selected purchaser has an extended warranty, how likely is it that he or she has a basic model? (Round your answer to four decimal places.)

Candid, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In...

Candid, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2020, the company incurred $800,000 on direct materials and $805,000 on conversion costs, for a total manufacturing cost of $1,605,000. Assume there was no beginning inventory of any kind on January 1, 2020. During January, 5,000 cameras were placed into production and all 5,000 were fully completed at the end of the month. What is the unit cost of an assembled camera in...

A company that manufactures and sells consumer video cameras sells two versions of their popular hard...

A company that manufactures and sells consumer video cameras sells two versions of their popular hard disk camera, a basic camera for $500, and a deluxe version for $1200. About 55% of customers select the basic camera. Of those, 30% purchase the extended warranty for an additional $100. Of the people who buy the deluxe version, 50% purchase the extended warranty. Complete parts a through d below. a) Sketch the probability tree for total purchases. Warranty 0.3 Basic and Warranty...

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the...

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates only to one customer's lean cell for the coming year. Projected labor and overhead, $2,865,800; materials costs, $35 per unit. Planned production included 5,152 hours to produce 16,100 motor drives. Actual production for August was 1,970 units, and motor drives shipped amounted to 1,480 units....

Bismarck Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS...

Bismarck Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Bismarck uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Model ZM Model DS Direct materials $ 45 $ 20 Direct labor 32 15 Category Estimated Cost Cost Driver Use of Cost Driver Unit level $ 27,000 Number of units ZM: 2,400 units; DS: 9,600 units Batch level...

Perez Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS...

Perez Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Perez uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Model ZM Model DS Direct materials $ 20.0 $ 9.0 Direct labor 28.0 11.0 Category Estimated Cost Cost Driver Use of Cost Driver Unit level $ 24,990 Number of units ZM: 2,400 units; DS: 9,500 units Batch...

Baird Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS...

Baird Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Baird uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Model ZM Model DS Direct materials $ 20.00 $ 7.00 Direct labor 28.00 9.00 Category Estimated Cost Cost Driver Use of Cost Driver Unit level $ 25,960 Number of units ZM: 2,400 units; DS: 9,400 units Batch level 52,000...

Question