Question

The following cost information pertains to the new CD: CD package and disc (direct material and labor): $2.50/CD Songwriters’ royalties: $0.70/CD Recording Artists’ royalties: $2.00/CD Advertising & promotion: $380,000 Sony Records Inc,’s Overhead: $300,000 Selling price to CD Distributor: $10.00 3) By what percent does this change in sales represent?

A. 25.36%

B. 15.32%

C. 79.17%

D. 15.63%

E. None of the above

Answer 1

Hello Friend, You are not give before change Information, if you provied me information in comment box, i edit this answer or give Correct answer.

Below Solution Not related with change in sales represent. Please give me full information related Above Question.

Break Even Sales (in CD) :-

Selling Price Per CD = $10 Per CD

Variable Cost Per CD = $2.50+$0.70+$2.00 = $5.2 per CD

Fixed Cost = $380000 + $300000 = $680000

Contribution Per Unit = $10 - $5.2 = $4.8 Per CD

Break Even Sales in CD = Fixed Cost / Contribution Per CD

= $680000 / $4.8

= 141667 CDs