Question

Sony International Corporation (SIC) is designing a new high-definition TV (HDTV) that is projected to have the following per-unit costs to manufacture Cost Categories Unit Costs $ 650 $ 250 Materials Cost Labor Costs $1,200 $2,100 Overhead Costs Total unit cost SIC adds 25% to its manufacturing cost for corporate profit? a) What profit would SIC realize on each HDTV? b) What is the overall cost to produce a batch of 8,500 HDTVS? c) What would SIC's profit be on the batch of 8,500 if historical data show that 2% of the product will be scrapped in manufacturing, 3% of finished product will go unsold, and 2% of sold product will be returned for refund?

Answer 1

Answer:

Given

Total unit cost C =$2100

1)

Corporate profit per unit =25%*C=25%*2100=$525

Selling price per unit S=2100+525=$2625

2)

Overall cost for producing 8500 HLEDs =8500*C=8500*2100=$17850000

3)

Scrapped =2%

Unsold =3%

Returned =2%

So Net sales =8500*(1-2%-3%-2%)=7905 units

Total revenue =S*7905=$20750625

So Profit = Total revenue -Overall cost for producing 8500 HLEDs =20750625-17850000=$2900625