Question

Executives of the Acer Computer Company, Inc. have produced a new micro- laptop personal computer for the rapidly expanding college student market. The following cost information pertains to the new computer:

Intel Processor and mother board ........................$125 Monitor ..................................................................$200 Assembly & testing (direct labor) ..........................$175 Advertising and promotion .............................$750,000 New machines and factory overhead ............$400,000 Selling Price..........................................................$700

Calculate the following:

1. Contributiondollarsperpersonalcomputer

2. Break-evenvolumeinunits

3. Break-even volume in dollars

4. Netprofitif7,500computersaresold

5. Necessarycomputerunitvolumetoachieve$1,000,000profit

Answer 1

1 Selling price per pc 2 Less: Variable cost per pc 3 Contribution dollar per pc 4 Processor and motherboard 5 Monitor 6 Assemble and testing 7 Variable cost per pc 700 -B7 -B1-B2 125 200 175 -SUM (B4:B6) 9 Advertising and promotion 10 Factory OH 11 Fixed cost 12 Cont per unit 13 Break even volume in units 14 Break even volume in dollars 750000 400000 -SUM(B9:B10) -B3 B11/B12 B13 B1 16 Units sold 17 Net profit 18 19 Units sold 20 Net profit 21 7500 B16 B3-B11 10750 -819"B3-B11