Petersville Videos is a boutique video shop located in Caulfield, a suburb of Melbourne, Australia. The...
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Petersville Videos is a boutique video shop located in Caulfield, a suburb of Melbourne, Australia. The owner of Petersville Videos, Peter Villiers, is examining his pricing structure for the two types of videos he stocks - classic videos and modern DVD's, due to recent complaints on prices by customers. The two types of videos Petersville Videos sells are Classic 1950's style movies that are considered premium and the more recent DVD's produced by the main movie houses. The corporate tax rate is 25%. Table 1 - Pricing and Variable Cost information for Petersville Videos Price per video/DVD ($) Variable Cost per DVD/video ($) Number of items sold Fixed Costs ($) Classic Videos 40 20 1,000 Modern DVD's 30 20 4,000 Total 5,000 24,000 Required (a) What is the Weighted Average Contribution margin based on the current number of Videos and DVDs sold? Show all the workings. (b) Based on the current Classic Videos/Modern DVD's sales, what is the After Tax Profit earned for the period? Show all the workings. (c) If the sales ratio of Classic Videos/Modern DVD's changed from the current ratio to 1:10, what would the total revenue at the breakeven point be? Show all the workings. Petersville Videos is a boutique video shop located in Caulfield, a suburb of Melbourne, Australia. The owner of Petersville Videos, Peter Villiers, is examining his pricing structure for the two types of videos he stocks - classic videos and modern DVD's, due to recent complaints on prices by customers. The two types of videos Petersville Videos sells are Classic 1950's style movies that are considered premium and the more recent DVD's produced by the main movie houses. The corporate tax rate is 25%. Table 1 - Pricing and Variable Cost information for Petersville Videos Price per video/DVD ($) Variable Cost per DVD/video ($) Number of items sold Fixed Costs ($) Classic Videos 40 20 1,000 Modern DVD's 30 20 4,000 Total 5,000 24,000 Required (a) What is the Weighted Average Contribution margin based on the current number of Videos and DVDs sold? Show all the workings. (b) Based on the current Classic Videos/Modern DVD's sales, what is the After Tax Profit earned for the period? Show all the workings. (c) If the sales ratio of Classic Videos/Modern DVD's changed from the current ratio to 1:10, what would the total revenue at the breakeven point be? Show all the workings.
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a The weighted average contribution margin can be calculated as follows Contribution margin per unit of Classic Videos Price Variable cost 40 20 20 Co... View the full answer
Related Book For
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey
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