Question

The Acropolis Corporation has developed a product line of Flux Capacitors that it markets to a small exclusive customer base. The data below outlines this year's financial performance of the product line. Calculate the Product Profit Margin for the Apollo product. Product Zeus Athena Apollo Hermes Minerva All Products Unit Unit Annual Standard List Annual Continuing Cost Price Promotion Engineering $ 100.00 $ 140.00 $ $ 14,090 $ 115.00$ 220.00 $ $ 11,740 $ 225.00 $ 300.00 $ 4,000 $ 30,530 $ 250.00 $ 390.00 $ 8,400 $ 25,840 $ 300.00 $ 480.00 $ 16,800 $ 16,440 $ 58,400 $ 136,240 Total $ 87,600 $ 234,880 Customer Beta Delta Total Product Zeus Athena Apollo Hermes Minerva Alpha Unit Units Price Bought Paid 420 $ 140.00 350 $ 220.00 288 $ 300.00 240 $ 390.00 200 $ 480.00 Units Bought 8401 $ 7000 $ 576 $ 480 $ 4000 $ Unit Price Paid 140.00 202.00 270.00 342.00 410.00 Gamma Unit Units Price Bought Paid 1260 $ 130.00 1050 $ 212.00 864 $ 290.00 720 $ 372.00 600 $ 460.00 Units Bought 1680 $ 14000 $ 1152 $ 960 $ 800 $ Unit Price Paid 126.00 198.00 270.00 351.00 432.00 Units Bought Revenue 42001 $ 551,880 3500 $ 718,200 2880 $ 803,520 2400 $ 862,560 2000 $ 881,600 Product Related Activity Cost Annual Technical Support Costs $ 93,950 Annual Shipping Costs $ 140,930

Answer 1

Total number of units sold = 4200 + 3500 + 2880 + 2400 + 2000 = 14,980

Distribution of product related costs to products on the basis of units sold

Annual Tech Support Costs

Apollo = Annual Tech Support Costs * Units of Apollo / Total number of units

= $93,950 * 2880 / 14,980

= $18,063

Annual Shipping Costs

Apollo = Annual Shipping Costs * Units of Apollo / Total number of units

= $140,930 *2880 / 14,980

= $27,095

Calculation of Profit on Apollo

Revenue $803,520

Less:

Standard cost(2880 units * $225) $648,000

Annual Promotion Cost $4,000

Annual Continuing Engineering $30,530

Annual Tech Support Costs $18,063

Annual Shipping Costs   $27,095

Profit $75,832