Majesty Company uses target costing to ensure that its products are profitable.Assume Majesty is planning to introduce a new product with the following estimates.Estimated market priceAnnual demandLife cycleTarget profit$ 1,90084,000 units1. Target Cost2. Target Cost3. Target Cost5 years22 percentage return on salesRequired:1. Compute the target cost of this product.2. Compute the target cost if Majesty wants a 44 percent return on sales.3. Compute the target cost if Majesty wants a 12 percent return on sales.

When determining the cost of a product using target costing, a targeted profit margin is subtracted…

Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates. Estimated market price Annual demand Life cycle Target profit $ 1,900 84,000 units 5 years 22 percentage return on sales Required: 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 44 percent return on sales. 3. Compute the target cost if Majesty wants a 12 percent return on sales.

Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates. Estimated market price Annual demand Life cycle Target profit $ 1,900 84,000 units 5 years 22 percentage return on sales Required: 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 44 percent return on sales. 3. Compute the target cost if Majesty wants a 12 percent return on sales.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 4QE: Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its...

See similar textbooks

Similar questions

Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates: Estimated market price Annual demand Life cycle Target profit $ 2,900 92,000 units years 1. Target Cost 2. Target Cost 3. Target Cost 5 27 percentage return on sales Required: 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 44 percent return on sales. 3. Compute the target cost if Majesty wants a 7 percent return on sales. 4
Marigold Corp. is using the target cost approach on a new product. Information gathered so far is as follows: Expected annual sales Desired profit per unit Target cost What is the unit selling price? O $0.30 O $0.64 O $0.62 O $0.32 500000 units $0.32 $150000
Wilderness Products, Incorporated, has designed a self-inflating sleeping pad for use by backpackers and campers. The following information is available about the new product: a. An investment of $1,350,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment needed in the manufacturing process. The company's required rate of return is 24% on all investments. b. A standard cost card has been prepared for the sleeping pad, as shown below: Direct materials Direct labor Manufacturing overhead (20% variable) Total standard cost per pad Standard Quantity or Hours 4.0 yards 2.4 hours 2.4 hours Standard Price or Rate $2.70 per yard $8.00 per hour $12.50 per hour Standard Cost $10.80 19.20 30.00 $ 60.00 c. The only variable selling and administrative expense will be a sales commission of $9 per pad. The fixed selling and administrative expenses will be $732,000 per year. d. Because the company manufactures many products, no more than 38,400 direct…
Bronco Truck Parts expects to sell the following number of units at the prices indicated under three different scenarios in the economy. The probability of each outcome is indicated. Outcome A B C Probability 0.20 0.20 0.60 Units 390 680 1,090 Total expected value Price $25 34 39 What is the expected value of the total sales projection?
Consider the following information for a given business. Sale revenue =GHS40,000 VC per unit =GHS20 Activity level =1,000 to break even Required: 1. Determine the TFC 2. Express the contribution as a percentage of sale. 3. The company plans to sale 1,500 unit in the next period. What will be the percentage margin of safety (MoS) 4. What margin should the business employ for planning purposes? 5. What total profit should the business expect in order to achieve it's planned sales?
A company would like to determine various costs and points to aid them in deciding whether to expand or not. If you are given the following information, compute the required amounts and / or figures.Selling price / unit = P100 Variable cost / unit = P70Annual fixed cost = P500,000 Compute 5. Sales in units to earn a profit of 10% of sales.
CVP Analysis using a chart: The cost-volume-profit chart for Byron Manufacturing is shown. Use the graph to complete the sentences given below. SALES AND COSTS (Dollars) 20000 Sales 15000 Total Costs 10000 5000 100 200 300 400 500 600 700 800 900 1000 UNITS OF SALES Byron Manufacturing reaches its break-even level of activity when it sells 500 -v units and generates $12,000 v in revenue, because at this level of activity the firm's revenue equals -v its total cost. In addition, you can determine from the chart that Byron Manufacturing's fixed costs are $6,000 -v and its price per unit is $24.00 V and variable cost per unit is $12.00 If fixed costs increase, what will happen to the break-even point? The break-even point will increase. If the price per unit decreases, what will happen to the break-even point? The break-even point will increase.
An industry is going to launch a new product in the market in the year 2018. The data pertaining to the costs and the estimated sales is provided as follows 1. Fixed cost for the year 2018-2019 is 20000$. 2. The variable cost per unit is 12$. 3. The estimated sales are 800000$. 4. If each unit is sold at 30$. Find out 1. Break-even point. 2. The profit at a turn-over of 25000 units. 3. Margin of safety in terms of units and sales. 4. If a profit target is 1200000$, compute the turn over required. 5. Also construct the break-even chart and show the details on it.
Solve the following independent cases and label your supporting computations properly. A) The company's projected profit for the coming year is as follows: Total P 200,000' 120,000 80,000 64,000 16,000 Per Unit P 20 Sales Less: Variable Costs 12 P 8 Contribution Margin P Less: Fixed Costs Net Income 1. Compute the additional profit that the company would earn if sales were P25,000 more than expected. B) KTA sells a special type of health food at a price of P16 per pound. Last year, it purchases this food from its supplier at a cost of P12 per pound. The supplier informed KTA that its cost increases and that this product will now be priced at P14 a pound. Over the years, KTA established a steady market and intends to pass the cost increase along to its customers and also add a P1 per unit to the price for additional profit. Fixed cost for the year are not expected to change and will remain at P34,000. Income tax rate is 32%. The net income after tax last year was P24,000. 2. If KTA can…
How much would be needed today to provide an annual amount of $50000 each year for 20 years, at 9% interest each year? a. $546,000 O b. $456,427 O c. $645,000 O d. $456,000
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Their current full cost for the product is $44 per unit.In order to meet the new target cost, how much will the company have to cut costs per unit, if any? a.$1 b.$2 c.$3 d.$0
Question 5: IKIT company produces and sells recliner chairs. IKIT uses an absorption product costing system, which means that both variable and fixed overhead are included in the product cost. Cost estimates for a recliner chair and expected production volume for next year are as follows: Per Unit Total $40 $20 Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Fixed manufacturing overhead Expected volume of production (units): $14 $15 $380,000 $460,000 42,000 The company's owners expect to earn a rate of return (ROI) of 30% on their invested assets of $2,500,000. Required: a. IKIT currently uses the cost-plus pricing method. Compute the mark-up percentage and target selling price that will allow IKIT to earn its desired ROI of 30% for next year.. Click or tap here to enter text.