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Question: Digital Solutions, Inc., manufactures two component parts for the television industry:  Voltag...

What price should Digital Solutions charge for the New Voltage Regulator, and what next steps should Digital Solutions take regarding the New Voltage Regulator?

7) Provide a recommendation given the case facts and your analysis.

8) Pay attention to detail within your answers in terms of spelling, grammar, and formatting.

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Digital Solutions, Inc., manufactures two component parts for the television industry:

 Voltage Regulator: Annual production and sales of 50,000 units at a selling price of $48.72 per unit.

 Mother Board: Annual production and sales of 25,000 units at a selling price of $72 per unit.

Digital Solutions includes all R&D and design costs in engineering costs. Assume that Digital Solutions has no marketing, distribution, or customer-service costs.

The direct and overhead costs incurred by Digital Solutions on the Voltage Regulator and Mother Board are described as follows: Voltage Regulator		Mother Board		Total
Direct materials costs (variable)	$1,020,000		$720,000		$1,740,000
Direct manufacturing labor costs (variable)	360,000		240,000		600,000
Direct machining costs (fixed)	180,000		120,000		300,000
Manufacturing overhead costs:
Machining setup costs			112,500
Testing costs			600,000
Engineering costs			480,000
Manufacturing overhead costs			$1,192,500
Total costs			$3,832,500

Answer 1