In order to sell a product at a profit, the product must be priced higher than the total cost to build the unit, plus period expenses and overhead. At the end of last year, Chester had their product Cake aimed at the Americas Budget segment. Usethe Globe's Product Analysis to find Cake's production cost (labor + materials) in the Americas region. Exclude possible inventory carrying costs. Assume period expenses and overhead total 50% of their production cost. What is the minimumprice the product could have been sold for in the American region to cover the unit cost, period expenses, and overhead? Question 4 options: 1) $14.07 2) $21.11 3) $20.46 4) $24.50

References Faria, A. R., Ferreira, L., & Trigueiros, D. (2018). Analyzing customer profitability…

Answered: In order to sell a product at a profit,…

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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Answer all parts of the question 1. The unit costs ($) for manufacturing a component for a washing machine are as follows: Direct labor: 20; direct materials: $5; indirect labor and materials: 20% of direct labor; fixed and administrative costs: 30; selling costs: 10. a) Assuming a 90% first-pass yield, what should the unit selling price be if the manufacturer desires a 20% profit margin for conforming product? b) The manufacturer has identified a secondary market for the nonconforming products, that they can sell at $75/unit. Conforming product they wish to sell at 30% above costs. What is the expected profit per unit sold if the company has the same first-pass yield as in part a)? c) If the company improves its first-pass yield to 98%, what is the expected profit per unit sold, assuming other conditions are as stated in part b)?
The Bat Division of World Baseball Berhad has just revised its actual cost data for 2020. Bat Division transfers goods to the Sport Division. Sport Division can buy the same goods in the open market for RM122 each. Bat's new cost data are as follows: Direct materials Direct labor RM 40 30 Variable overhead Fixed overhead Variable selling expenses Fixed selling and admini strative expenses Total costs 10 16 6. + 12 RM114 20 RM134 Desired retum Sales price + Current production is 200,000 units, and the Bat Division has a capacity of 300,000 units. Required: What is the lowest price the Bat Division should charge for the intemal transfers of its goods? b. a. What is the highest price the Sport Division should pay for the units? Give the primary reason why the Bat Division should reduce its price. с.
A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $132.00 per unit. The company requires a profit of 0.20 of selling price. How much is the target cost per unit? Round to two decimal places.
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Basic Motor Corporation uses target costing. Assume that Basic marketing personnel estimate that the competitive selling price for the QuikCar in the upcoming model year will need to be $23,400. Assume further that the QuikCar's total unit cost for the upcoming model year is estimated to be $19,900 and that Basic requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Basic establish for the QuikCar for the upcoming model year?$fill in the blank 1 b. Since the estimated manufacturing cost the target cost, Basic its total costs to maintain competitive pricing within its profit objectives.
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Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company gathered the following information: Number of units to be produced and sold each year Unit product cost Estimated annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI) Required: 1. Compute the markup percentage on absorption cost required to achieve the desired ROI. 2. Compute the selling price per unit. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 1. Markup percentage on absorption cost 2. Selling price per unit 12,000 $26.00 $ 26,400 $ 300,000 12% %
Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year. 10,500 24 32 Unit product cost Estimated annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI) 34,800 $ 690,000 ok 12% nt Required: 1. Compute the markup percentage on absorption cost required to achieve the desired ROI. 2. Compute the selling price per unit. (Do not round intermediate calculations. Round your answer to 2 decimal places.) nt ences 1. Markup percentage on absorption cost 2. Selling price per unit Prev 1 of 3 Next >
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Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 6,000 Unit product cost $ 50 Estimated annual selling and administrative expenses $ 24,000 Estimated investment required by the company $ 300,000 Desired return on investment (ROI) 12 % Required: 1. Compute the markup percentage on absorption cost required to achieve the desired ROI. 2. Compute the selling price per unit. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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