Product Pricing: Two Products Disks for You manufactures two products, CDs and DVDs, both on...
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Product Pricing: Two Products Disks for You manufactures two products, CDs and DVDs, both on the same assembly lines and packaged 10 disks per pack. The predicted sales are 400,000 packs of CDs and 500,000 packs of DVDs. The predicted costs for the year 2017 are as follows:
Variable Costs
Fixed Costs
Materials
$300,000
$600,000
Other
350,000
900,000
Each product uses 50 percent of the materials costs. Based on manufacturing time, 40 percent of the other costs are assigned to the CDs, and 60 percent of the other costs are assigned to the DVDs. The management of Disks for You desires an annual profit of $200,000.
(a) What price should Disks for You charge for each disk pack if management believes the DVDs sell for 20 percent more than the CDs? Round answers to the nearest cent.
CDs $Answer
DVDs $Answer
(b) What is the total profit per product using the selling prices determined in part (a)? Use negative signs with answers, if appropriate.
CDs $Answer
DVDs $ Answer
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