SungSam, Inc. is currently designing a new digital camcorder that is projected to have the following per unit costs to manufacture:
Cost CategoriesUnit Costs
Materials costs......................... $112
Labor costs.................................85
Overhead costs...........................213
Total Unit Cost......................... $410
SungSam adds 30% to its manufacturing cost for corporate profit. Answer the following questions:
(a) What unit profit would SungSam realize on each camcorder?
(b) What is the overall cost to produce a batch of 10,000 camcorders?
(c) What would SungSam's profit be on the batch of 10,000 if historical data shows that 1%of product will be scrapped in manufacturing, and 3% of finished product will go unsold, 2% of sold product will be returned for refund?
(d) How much can SungSam afford to pay for a contract that would lock in a 50% reduction in the unit material cost previously given? ITSungSam does sign the contract, the sales price will remain the same as before.