Question

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $16,770. The booth will be open 39 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $179 per package. She will continue to sell the existing product, EZRecords, which costs $105 per package. Ms. Ortega believes that the salesperson will spend approximately 29 hours selling EZRecords and 10 hours marketing ProOffice.

Required

1. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 90 units of EZRecords and 51 units of ProOffice.

2. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 209 units of EZRecords and 104 units of ProOffice.

(For all requirements, round "Cost per unit" to 2 decimal places.)

Answer 1

Question 1

Particulars	EzRecords	Pro Office
Total Cost	21,920	13,429
Cost per Unit	243.56	263.31

Particulars	EzRecords	Pro Office
Total Fixed Costs	16,770	16,770
Proportion of Fixed Costs	29/39	10/39
Fixed Costs	12,470	4,300

Particulars.	EzRecords	Pro Office
Units in Sales	90	51
* Cost per Unit	105	179
Total Purchases Cost	9,450	9,129

Particulars	EzRecords	Pro Office
Total Purchases Cost	9,450	9,129
Total Fixed Costs	12,470	4,300
Total Cost	21,920	13,429

Particulars	EzRecords	Pro Office
Total Costs	21,920	13,429
÷ Number of Units Sold	90	51
Cost per unit	243.56	263.31

Part B

Particulars	EzRecords	Pro Office
Total Cost	34,415	22,916
Cost per Unit	164.66	220.35

Particulars	EzRecords	Pro Office
Total Fixed Costs	16,770	16,770
Proportion of Fixed Costs	29/39	10/39
Fixed Costs	12,470	4,300

Particulars.	EzRecords	Pro Office
Units in Sales	209	104
* Cost per Unit	105	179
Total Purchases Cost	21,945	18,616

Particulars	EzRecords	Pro Office
Total Purchases Cost	21,945	18,616
Total Fixed Costs	12,470	4,300
Total Cost	34,415	22,916

Particulars	EzRecords	Pro Office
Total Costs	34,415	22,916
÷ Number of Units Sold	209	104
Cost per unit	164.66	220.35