A Digitized Music Tuner Has Been a Staple in Smooth

question 82

Essay

A digitized music tuner has been a staple in Smooth Sounds' product line for several years. Annual fixed costs of production and administration related to this product in the past have been $643,500. Variable costs of production and sales have been $17 per unit. The selling price in the past has been $28 per unit. Based on the appearance of competing products on the market, management has asked you to do the following:
a. Compute the breakeven point in units and sales dollars for the present product.
b. Compute the breakeven point in units and sales dollars if the variable costs increased by $3 per unit and the fixed costs increased by $14,375 per month.
c. Using the information from (b), an expected additional monthly advertising charge of $10,000, and a monthly sales rate of 15,000 units, compute the competitive selling price that the company must obtain in order to have a profit of $32,000 per month.

Understand the relationship between the supply of loanable funds and its impact on interest rates, net capital outflow, and exchange rates.

Identify and explain the effects of changes in investment desirability on the economy.

Analyze the influence of U.S. residents' purchases of foreign assets on exchange rates and market curves.

Evaluate the consequences of fiscal policy changes on government deficit, net capital outflow, and the economy.

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Definitions:

Distribution Costs

Expenses related to delivering goods from the manufacturer to the end consumer, including transportation and warehousing.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific time, showing assets, liabilities, and shareholders' equity.

Selling Price

The amount of money for which a product or service is sold to customers.

Accrued Loss

Refers to a loss that has occurred but has not yet been recorded in the accounting records through the date of the financial statements.