Advanced Electronics

Advanced Electronics

manufactures DVDs and sells them directly to retailers who typically sell them for $20. Retailers take a 40 percent margin based on
the retail selling price. Advanced’s cost information is as follows:

DVD package and disc	$2.50/DVD
Royalties	$2.25/DVD
Advertising and promotion	$500,000
Overhead	$200,000

Calculate the following:

a. contribution per unit and contribution margin

b. break-even volume in DVD units and dollars

c. volume in DVD units and dollar sales necessary if Advanced’s profit goal is 20 percent

profit on sales

d. net profit if 5 million DVDs are sold

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