Allied Laboratories is combining some of its most common tests into on

QUESTION

Allied Laboratories is combining some of its most common tests into one price packages. One such package will contain three tests that have the following variable costs:Test A Test B Test CDisposable syringe $3.00 $3.00 $3.00Blood vial 0.50 0.50 0.50Forms 0.15 0.15 0.15Reagents 0.80 0.60 1.20Sterile
a. Test A Test B Test C Disposable syringe $3 $3 $3 Blood vial 0.5 0.5 0.5 Forms 0.15 0.15 0.15 Reagents 0.8 0.6 1.2 Sterile bandage 0.1 0.1 0.1 Breakage /losses 0.05 0.05 0.05 Calculation Combind cost Disposable syringe = 1*3 $3.00 Blood vial = 2*0.5 $1.00 Forms = 3*0.15 $0.45 Reagents = 0.8 0.6 1.2 $2.60 Sterile bandage = 1*0.1 $0.10 Breakage /losses = 1*0.05 $0.05 Total variable cost $7.20 Minimum selling price is = $7.20 b. Combined Per test Total variable cost = $7.20 = $2.40 Required contribution margin = $30.00 = $10.00 Selling price = 37.20 = $12.40 c. Total tests = 2000 Total variable cost (2000 * 7.2) = $14,400 Total fixed cost = $40,000 Total cost = $54,400 =54400/2000 Selling price

er unit = $27.20 Verification: Sales (2000*27.2) = $54,400 Variable cost (2000 * 7.2) = $14,400 Contribution margin = $40,000 Fixed cost = $40,000 Income 0 To getting $20,000 profit: Break Even Sales = $54,400 Required profit = $20,000 Total sales = $74,400 Total units = 2000 Selling price per unit = 74400 / 2000 = $37.20 Verification: Sales (2000*37.2) = $74,400 Variable cost (2000*7.2) = $14,400 Contribution = $60,000 Fixed cost = $40,000 Income = $20,000 Thank you

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