Question

Scenario #1: Random Recordings Executives of er of Random Recordings, Inc. produced a CD entitled Urban Sunshine by one of their top artist Conman Best. The cost and price information is as follows: CD Case Cover $0.27 per CD Songwriter's royalties $0.40 per CD Recording Artist Royalties $0.60 per CD Direct Material and Labor $1.00 per CD Distribution $0.98 per CD Demand Schedule Price Demand $12.00 120,000 $14.00 115,000 $15.00 112,500 $16.00 112,000 $17.00 102,000 In addition, Random Recordings paid one-time expenses of $221,000 for advertising, studio fees, plus miscellaneous expenses, and a $400,000 advance to Conman Best; for a total of $621,000. 46. Refer to Scenario #1 (Random Recordings). What are the total variable costs? a $1.00 b. $3.25 c. $221,000 d. $400,000 e. $621,000 47. Refer to Scenario #1 (Random Recordings). Using the demand schedule, at what price does Urban Sunshine maximize profits? a. $12.00 b. $14.00 c. $15.00 d. $16.00 e none of the above 48. Refer to Scenario #1 (Random Recordings). With a suggested retail price of $16.00 and a wholesale price of $12, what is the percent mark-up on selling price a. 25% b. 30% c. 33% d. 125%

Answer 1

46) Total Variable cost Answer cu : $400,000 Summary : the that compay para it stated tupe " advertising, Studiomislelu nous In additional into it Staled that total of $ 621,000 for expenses were $221,000 for advertising, studio? they are reganted as fixed costs - other than fixed costs they are var .: Variable costs = 6,21,000 $221,000 : $400,000. 47) Manimise profits ida (d) is $ 16.00. Answer 1. Summary : The total cost estimated are $ 6.21,000 for fc uve & additional $3.25 per finit 15 involved r. demand units. I units units I units 120000 115000 112500 112000 price per unit Total price (unit x price 190000 x12 $1,440,000 1,610,000 1,6 87 500 1,392,000 115000x14 1128000X15 112000 x 16 contented

c) Total cost 6210001 621000 1 giver d 621000, 621000 3656251 364000 290000 | 3737 Additional cost ( $325 X6ocf profit - dunad | 807000 e 1 429000 1615250 01615250 /700875 to cb-e-d) profit is mauimum. the $16, profit Since in price $16, the pre $16.00 49) Given suggested retail price Wholesale price $12.00 percent markup on selling price We use different formulas for mane up pru some commonly and is - Retail whole sale price price 100 -markup't. $16 100-manupt. marups $12 - 100-markup). 916 0.75 - 1 --markupy) 0.25 = markup. Answer: (a) = 0.25 (on 25%.