Question

Assume Digby expands operations in Asia Pacific in the coming year. In doing so, they have added capacity to fill all demand in-house and have increased automation to reduce labor cost by 10%.
For clarity, assume the following are true:

• Daze material cost is still $12.75.
• Daze labor cost last year was $9.00.
• Daze will be priced at $32.50 per unit, in American dollars.
• Shipping costs from the Americas to Asia Pacific are $2.50 per unit.

What will Daze's contribution margin be in Asia Pacific for the coming year?

33.1%

25.4%

28.2%

35.8%

Answer 1

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