Apple offers extended service contracts that provide repair coverage for

Apple offers extended service contracts that provide repair coverage for its products. Assume Apple charges$160 to repair an iPhone screen and $400 for other repairs. Services are provided in a ratio of 2 screens to 1 other repair(2:1). Variable costs are 40% of selling price for iPhone screen repairs and 48% of selling price for other repairs. Assume fixed costs are $2 billion per year for the repair services department.

Required

1. Compute the selling price per composite unit for Apple’s repair services.

2. Compute the variable cost per composite unit for Apple’s repair services.

3. How many composite units must Apple’s repair services department sell each year to break even?

4. At the break-even level, how many screen repairs and other repairs will Apple complete each year?

Data from Apple’s

 

 

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