1. Executives of Studio Recordings, Inc. produced the latest CD by the Starshine Sisters Band, titled Sunshine/Moonshine. The following cost information pertains to the new CD:
CD package and disc (direct material & labor) $1.25 per CD Songwriter’s royalties $0.35 per CD Recording artists’ royalties $1.00 per CD Advertising & promotion $275,000 Selling price to CD distributor $9.00
Calculate the following:
a. Contribution per CD unit
b. Breakeven volume in CD units
c. Breakeven volume in dollars
d. Net profit if 1 million CDs are sold
e. The number of CD units that must be sold to achieve a $200,000 profit