Management accounting Research Paper Example | Topics and Well Written Essays - 1000 words

Management accounting - Research Paper Example $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 e ach 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) = $153.15 Manufactured ZEON hard drives Contribution Selling price for