Zeus Optical Case Study - Spring 10 - 1) YOUR NAME...

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1) YOUR NAME ________________________________________________2) YOUR PEOPLESOFT NUMBER _______________________________3) YOUR INSTRUCTOR’S NAME _____________________________4) YOUR RECEIPT NUMBER _______________(lab assistants will give you this)Zeus OpticalThe following table provides key information about the product lines.EyepiecesBinocularsCamera LensSales volume (units)32,50023,0009,000Price$46.00$77.00$127.00Unit Variable Cost of Licensing & Patents$10.00$15.00$41.00Unit Variable Cost of Direct Labor & Materials$23.00$28.00$35.00Unit Contribution Margin (before overhead)$13.00$34.00$51.00Overhead per Unit (calculate below)Unit Profit Margin After Deducting Overhead$(1.90)$1.71$31.13Labor hours / unit0.601.300.80Annual Overhead Costs =$1,405,840.00The firm allocates this overhead among product lines using the number of labor hours used by each product line.CASE FACTS:Zeus Opticals is a specialist manufacturer of optical instruments. Zeus has recently expanded its core product market ofbinoculars into making eyepieces for microscopes / telescopes, and screw-on lenses for digital SLR cameras. The firmbelieves that it makes little money selling binoculars and that these new markets have great profit potential.Somewhat to Zeus’s surprise, it finds it tough to make money with eyepieces. As of now, the firm is selling the product at anegative profit margin. Yet, Zeus faces intense price pressure in this segment, and thinks that it might have to lower prices by5% or more to stay competitive. The market for binoculars has been stable for several years, and Zeus expects the trends tocontinue for the near future. Zeus is most excited about entering the market for screw-on lenses for digital SLR cameras.Although current volumes are small (relatively), Zeus believes that there is substantial market potential for this product.

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Term
Spring
Professor
VANDAVEER
Tags
Marketing, Photographic lens, Digital single lens reflex camera

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