Write 4 pages thesis on the topic management accounting. $120 + $6.50 = $126.50 * 500 = $63,250 (Total cost) Total sales for purchased hard drives = 500 * $154.00 = $77,000 Total profit generated from purchased hard drives = $77,000 – $63,250 = $13,750 If Malibu Systems Inc. concentrates on the ZEON hard drives market, it could make an annual profit of ($13,750 + $216,125) $229,875. By producing manufacture memory chips, Malibu Systems Inc. can sell up to 3,500 memory chips per year at a price of $65.00. Annual sales – $227,500. Production costs – $62.25 * 3,500 = $217,875 Profit generated from production and sales of memory chips – ($227,500 – $217,875) = $9,625 Production of memory chips for Malibu Systems Inc. is not a brilliant idea to invest in because it gives lower profit margins than production of Zeon hard drives. Part 2: Contribution Margin per Unit for. Purchased ZEON hard drives Contribution The formula for determining contribution is the sale price minus variable costs (Eisen 2007, 35). Selling price for each ZEON hard drive that has been purchased $154.00 per hard drive The variable cost incurred $0.85 per hard drive Contribution margin ($154 – $0.85) = $153.
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