Question

1. Kodak, Inc. is designing a new digital Camcorder that is projected to have the following per-unit costs to manufacture:

Cost Categories	Unit Costs
Materials costs	$63
Labor costs	24
Overhead costs	100
Total Unit Cost	187

Kodak adds 20% to its manufacturing cost for corporate profit.

1. What unit profit would Kodak realize on each camcorder?
2. What is the overall cost to produce a batch of 10,000 camcorders?
3. What would Kodak’s profit be on the batch of 10,000 if historical data show that 1% of 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

Total unit cost = 187

a) as Kodak adds 20% to its manufacturing cost for profit therefore, unit profit = 0.2 *187 = 37.4

b) overall batch profit = 37.4 * 10000 = 374000

c) In the batch of 10000

1% is scraped = 1% of 10000 = 100

Finished product =10000 - 100 = 9900

3% of finished will go unsold = 0.03*9900 = 297

Products sold = 9900-297 = 9603

2% of sold products will return

returned = 0.02*9603 = 192

Remaining = 9603 - 192 = 9411

Total Profit = 9411*37.4

= 351971.14