(Solution) - Susan Young a part time inventor met Henry Jones a Christmas -(2025 Original AI-Free Solution)

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Susan Young, a part-time inventor, met Henry Jones, a Christmas ornament manufacturer, while golfing. Henry manufactures an ornament everyone loves, but stores will not carry because they are very fragile and often break during shipping. Susan told Henry about a plastic box she had developed that would protect such fragile items during shipping. After crash testing the plastic box, Henry offered Susan a contract to purchase 100,000 of the boxes for $2.50 each. Susan is convinced that the box has many applications and that she can obtain future orders. Production of the plastic boxes will take one year. Estimated costs for the first year are as follows:
Lease payments on building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $900 per month
Lease payments on machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,200 per month
Cost to retool machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,000
Depreciation on machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,600
Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.70 per box
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.40 per box
Indirect materials and other manufacturing overhead . . . . . . . . . . . . . . . . . . .$0.20 per box
Interest on loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,500
Administrative salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$15,000
Required:
1. Using the information provided, determine Susan?s contribution margin and projected profit at a sales level of 100,000 boxes.
2. If Susan?s salary as an attorney is $50,000, determine how many boxes Susan must sell to earn profits equal to her salary.