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In: Accounting

1) Executives of Studio Recordings, Inc. produced the latest compact disc by the Starshine Sisters Band....

1) Executives of Studio Recordings, Inc. produced the latest compact disc by the Starshine Sisters Band. The following cost information pertains to the new CD:

CD package and disc (direct material and labor)                   $1.25/CD

Songwriters’ royalties                                                                         $0.35/CD

Recording artists’ royalties                                                              $1.00/CD

Advertising and promotion                                                              $275,000

Studio rent                                                                                                $250,000

Selling price to CD distributor                                                        $9.00

Calculate the following:

  1. contribution per unit
  2. break-even volume in CD units and dollars
  3. net profit if 1 million CDs were sold
  4. necessary CD unit volume to achieve a $200,000 profit
  5. the percentage share of the market that the CD has to achieve to earn $200,000 profit, assuming the total market for the CD is 250,000 units.

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Expert Solution

ekkarill92 answered 1 year ago
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