Question: Amazon's tablet computer Kindle has slim contribution margin s at the $199 retail price. Admittedly, this product is trying to change the way we read
• Display screen $35
• Touch screen $25
• Assembly labor $11
• Battery $12
• DRAM Processor Chips $22
• Allocated Advertising $ 7
• Allocated overhead $14
• Software License $37
• 8 GB memory module $8
• Allocated R&D $12
• Wireless WiFi / Bluetooth $6
• Hard case $34
a) Categorize the listed costs as variable or fixed costs.
b) Calculate the contribution margin and contribution margin percentage per unit
c) What about Apple iPads - Would their contribution margins be higher? Support your answer (your answer will require some market knowledge and relationship to pricing power).
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