Case Study
Camelback Communications Inc.
1.What will CCI now have to charge for each product to make a 40% mark-on? If CCI maintains its rule about dropping products with a mark-on below 25%, which additional products, if any, will it drop?
	A	B	C	D
Material Cost	15	5	10	5
Direct Labor	30	5	15	10
Variable Overhead	15	7.5	5	7.5
Variable Cost Per Unit	60	17.5	30	22.5
Fixed Cost Per Unit	22.5	6.56	11.25	8.43	$45,000/12,000 = 3.75
Total Cost	82.5	24.06	41.25	30.93	3.75 x Variable Cost
Existing Unit Cost	$85	$16.67	$45	$28.34
Total Cost	82.5	24.06	41.25	30.93
Total Profit	$2.50	($7.39)	$3.75	($2.59)
Mark-on 40%	33	9.624	16.5	12.373
Selling Price	115.5	33.68	57.75	43.3	Price W/ 40% Mark-on
5.What would happen if the firm modified its cost system so that all variable costs were traced to the product accurately but fixed costs were allocated using the existing system?
Drop Product B and D because they're showing the lowest profits