16. Smirnoff Corp. invested P31,250,000 in a cabinet-making business. It expects to earn a 25% return on its investment in equipment used in the manufacturing the cabinets. Its consultants estimate that 10,000 units of cabinets next year. Estimated costs per unit of cabinet at this level follows: Variable manufacturing costs = P1,562.50; Fixed selling and administrative costs = P625.0O; Fixed manufacturing costs = P312.50. To accomplish the company objective, one cabinet should be priced at:

16. Smirnoff Corp. invested P31,250,000 in a cabinet-making business. It expects to earn a 25% return on its investment in equipment used in the manufacturing the cabinets. Its consultants estimate that 10,000 units of cabinets next year. Estimated costs per unit of cabinet at this level follows: Variable manufacturing costs = P1,562.50; Fixed selling and administrative costs = P625.0O; Fixed manufacturing costs = P312.50. To accomplish the company objective, one cabinet should be priced at:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A certain factory produces 2000 Ton per year of its product. Th price of one kilogram is 1.8$. The annual direct production cost is 2million $ when the factory works at its whole capacity. Other fixed costs are 7X10^5 b) If the selling price increases by 10% calculate the increase in the net profit at the whole capacity assuming the taxes are 48% of the gross profit.
The following data refer to the Daniels division of Tippett Inc. Daniels sells variable- speed drills. The standard drill sells for $ 40, and Daniels plans to sell 30,000 units in 2017. Tippett treats Daniels as an investment center with a total attributable investment of $ 800,000. Daniels' annual fixed costs are $ 200,000. Variable cost per standard drill is $ 24. The firm's required rate of return on investment is 15%. 1.1 What is the expected Return on Investment in 2017? 1.2 What is the expected residual income for Daniels in 2017? A special order from a unit of the US Government has been received to buy from Daniel 10,000 units every year of the device at the price of $30 each. If the order is accepted, Daniels will have to incur additional annual fixed costs of $30,000 for administration and $150,000 to modify and expand the manufacturing facilities. 1.3 Based on the effect on ROI and/or Residual Income for the first year , will the manager accept this order? Why and why not?
A company is planning a new product. Market research information suggests that the product should sell 20,000 units at $35.00/unit. The company seeks to make a margin of 20% on sales. It is estimated that the lifetime costs of the product will be as follows: a. Research and development costs $60,000 b. Manufacturing costs $25/unit c. Decommissioning Costs $40,000 What is the Target Cost per unit? What is the original lifecycle cost per unit?
A4
D) Nuevo Company manufactures a product which sells for P5. At present, the company produces and sells 50,000 units per year. Unit variable manufacturing and marketing expenses are P2.50 and P.50 respectively. Fixed expenses are P70,000 for tactonY overhead and P30,000 for marketing and administration. The sales manager hos proposed that the price be increased to P6. To maintain the present sales volume. advertising must be increased. The company's profit objective is 10% of sales. 2. Compute the additional expenditure the company can afford for advertising. E) The annuUal FC amounted to P798,000. At present, the contribution margin ratio is 42%. 3. Determine the amount of sales if the desired profit is P173,800 net of the ff. fax rates: For the first P100,000 25% In excess of P100,000 35% F) Bosh Company expects to incur the following costs to produce and sell 70,000 units of its product: Variable manufacturing cost Fixed manufacturing cost Variable marketing expense Fixed marketing…
Comfort Ride manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following informatio relates to current production of seats: Sale price per unit Variable costs per unit: Manufacturing $400 $230 Marketing and administrative $60 Total fixed costs: Manufacturing $790,000 Marketing and administrative $210,000 A. Increase by $49,000 B. Increase by $60,000 OC. Decrease by $49,000 OD. Increase by $229,000
Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: 800 units. $ 3,680 $ 1,680 $ 530 $ 493,400 Manufacturing Selling Allocated common costs per year: Manufacturing Selling and administrative $ 73,000 $ 98,000 $ 130,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling products will decrease by $236,000 per year. Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for th company to add the new product line? Complete this question by entering your answers in the tabs below. Required 1…
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Seabold Interiors sold 18,400 yards of wallpaper last year at a contributionmargin of $3.50 per yard and incurred $49,400 in total fixed costs. This year, contribution margin per yard is expected to increase to $4, and fixed costs are expected to increase to $58,000. How many units must be sold this year to earn the same operating income as was earned last year? (Hint: Use the expanded contribution margin model described in this chapter.)a. 16,900.b. 17,500.c. 18,250.d. 20,200.e. None of the above.
91. Subject :- Accounting