As AdWorld’s sales manager, assume that you estimate costs pertaining to a proposed job as $17,076. Your normal pricing policy is to apply a markup of 18% from total costs. However, you learn that three other agencies are likely to bid for the same job, and that their quotes will range from $16,500 to $22,000. What price should you quote? What factors other than cost must you consider?
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As AdWorld’s sales manager, assume that you estimate costs pertaining to a proposed job as $17,076. Your normal pricing policy is to apply a markup of 18% from total costs. However, you learn that three other agencies are likely to bid for the same job, and that their quotes will range from $16,500 to $22,000. What price should you quote? What factors other than cost must you consider?
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- The cost data for BC Billing Solutions for the year 2020 is as follows: Using the high-low method, express the companys overtime wages as an equation where x represents number of invoices processed. Assume BC has monthly fixed costs of $3,800. Predict the overtime wages if 9,000 invoices are processed. Predict the overtime wages if 6,500 invoices are processed. Using Excel, create a scatter graph of the cost data and explain the relationship between the number of invoices processed and overtime wage expense.Howard Cooper, the president of Thornton Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 42,000 hours of services in Year 3. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Thornton charges customers $79 per hour, the firm can achieve 48,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if the…Howard Cooper, the president of Stuart Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 30,000 hours of services in Year 3. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Stuart charges customers $80 per hour, the firm can achieve 36,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if the firm…
- Columbus Inc. sells a high end hair dryer in a super competitive marketplace. As a result, market research and competitive pressures influence the determination of their selling price. Their marketing department has done a comprehensive analysis and It looks like a price of $57 would be appropriate given the present business environment. The company has a goal of earning $28 on each unit. What is the target unit cost of each hair dryer? Enter your answers without dollar signs or commas.Suppose a loyal customer requested to a special order to buy 100 units at $5.50 per unit. This is a one-time only order, the manufacturing company has the capacity to fill this order, and by filling the order no other regular order will go unfilled. Would you fill this order if you were the manager? Why? Is there an opportunity cost associated with this order? Explain. What would be the per-unit profit or loss for filling this order?Directions: For each situation, select one option you think will help increase profit. Put the letter of your choice in the blank. Below each answer, write your rationale. When you have finished, ask your instructor for a copy of the answer guide to verify your responses. A. Avoid extra payroll expenses. B. Get the best rates on advertising. C. Change the product you provide. D. Use resources wisely. E. Beat the competition. F. Get the best rates on supplier purchases. G. Eliminate some free services. H. Increase worker e iciency. _1. A shop that sells fine glassware offers gift wrapping at no extra cost. Rationale: 2. Two stores sell the same video game at the same price. Rationale: 3. There are 12 places to buy the yarn needed for a knitting factory. Rationale: 4. Employees at a printing company do not have a system for completing their tasks quickly and accurately. Rationale: 5. At a sign-making company, the extra metal is discarded. Rationale:
- Columbus Inc. sells a high end hair dryer in a super competitive marketplace. As a result, market research and competitive pressures influence the determination of their selling price. Their marketing department has done a comprehensive analysis and It looks like a price of $61 would be appropriate given the present business environment. The company has a goal of earning $30 on each unit. What is the target unit cost of each hair dryer? Enter your answers without dollar signs or commas. ASUS 13 f4 E3 X 19 OLF 11 (12 3. & 4. 5 7. 8. E T. Y. F G H K t6 立As a new accountant of the company, you are provided with the following information related to KOKO: Product Annual production and sales unit Direct material cost per unit Direct labour cost per unit Machine hours per unit Selling price per unit Koko 5,500 RM50 RM35 3 hours RM150 The company is considering of changing the traditional method to the Activity Based Costing (ABC) method. In order to adopt ABC method the following information is required: Activity Cost Cost Driver Pool Expected overhead Expected use of drivers per product Other products 3,500 costs Коко (RM) No of purchase orders Machine hours Maintenance Maintenance hours Number of inspections Total Purchasing 4,000 37,500 Machining 16,500 8,000 1,500 147,000 43,000 3,500 Quality control 1900 1600 17,500 245,000 Required: a. If the company decided to use the Activity Based Costing (ABC) method, determine the cost per unit of KOKO. Based on your answer in (a), advise whether the company should change to ABC method. Support…The graphs below represent cost behavior patterns that might occur in acompany's cost structure. The vertical axis represents total cost, and thehorizontal axis represents activity output. Required:For each of the following situations, choose the graph from the group a-1 that best illustrates the cost pattern involved. Also, for each situation,identify the driver that measures activity output. 1. The cost of power when a fixed fee of $500 per month is chargedplus an additional charge of $0.12 per kilowatt-hour used2. Commissions paid to sales representatives. Commissions arepaid at the rate of 5 percent of sales made up to total annual salesof $500,000, and 7 percent of sales above $500,000.3. A part purchased from an outside supplier costs $12 per part for the first 3,000 parts and $10 per part for all parts purchased inexcess of 3,000 units.4. The cost of surgical gloves, which are purchased in incrementsof 100 units (gloves come in boxes of 100 pairs).5. The cost of tuition at a…
- Flavor Enterprises has been approached about providing a new service to its clients. The company will bill clients $170 per hour; the related hourly variable and fixed operating costs will be $80 and $14, respectively. If all employees are currently working at full capacity on other client matters, the per hour opportunity cost of being unable to provide this new service is: Multiple Choice $0. $76. $90. $94. $170.Calculate the total cost & quotation price of Job #W500, given that a margin of 25% is applied.You are the new cost accountant for ABX Corporation. After careful review of the company’s operations you have been tasked to determine the company’s break-even point, the numbers sold to meet the company’s target profit and contribution income statement for both outcomes. Management has also asked that you provide the pros and cons for variable, traditional and activity-based costing method. After providing the pros and cons of each method recommend one method for the company’s use and support your discussion. Company’s Data: ABX Corporation sold 450,000 units at $75/unit. Fixed cost are $5,300,000 per year. Variable costs are $45 per unit. ABX Corporation desires a target profit of $6,500,000 per year.
