Within this month, calculate the contribution margin and what should Razerian do if they want to get optimum margin? Suppose that you’re Razerian’s Business Director, what should you take place to get the optimum sales revenue?

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Chapter3: Cost-volume-profit Analysis
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Razerian makes production for audio. A total of 500 hours in January 2021 is available per month in this operation beause they face COVID 19, so they must decrease their productive hours. Data concerning the company’s four products appear below:

 

Headphone

Earbuds

Speaker bluetooth

Home teather

Monthly demand in units

80

120

100

140

Hours required in operation per unit

0.6

1.8

0.4

2.5

Unit contribution margin

$12

$36

$8

$50

Variable expenses

$8

$20

$5

$30

 

No fixed costs could be avoided by modifying how many units are produced of any product or even by dropping any one of the products.

  1. Within this month, calculate the contribution margin and what should Razerian do if they want to get optimum margin?
  2. Suppose that you’re Razerian’s Business Director, what should you take place to get the optimum sales revenue?
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