Target CostingToyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year willneed to be $23,300. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be $19,800 and that Toyota requires a 20% profit margin onselling price (which is equivalent to a 25% markup on total cost).a. What price will Toyota establish for the Camry for the upcoming model year?18,640 Xb. Since the estimated manufacturing cost exceedsobjectives.the target cost, Toyota must reduceits total costs to maintain competitive pricing within its profitFeedbackCheck My Worka. What dictates the price?b. Compare desired profit with estimate price.

Step 1:Target costing is a method of determining a product's life-cycle cost, which should be…

Answered: Target Costing Toyota Motor Corporation…

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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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 $23,100. Assume further that the QuikCar's total unit cost for the upcoming model year is estimated to be $19,200 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?
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 $23,500. Assume further that the QuikCar's total unit cost for the upcoming model year is estimated to be $19,400 and that Basic requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Basic establish for the QuikCar for the upcoming model year?$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.
Target Costing Toyota Motor Corporation (TM) uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be $22,500 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Toyota establish for the Camry for the upcoming model year?
How much should the company set as selling price if it is to achieve the target of 20% RoI?
The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model: Variable manufacturing costs Applied fixed manufacturing overhead Variable selling and administrative costs Applied fixed selling and administrative costs $ 380 190 145 160 What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 205%?
Target Costing 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 $19,900 and that Basic requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Basic establish for the QuikCar for the upcoming model year?$ b. Since the estimated manufacturing cost is less than the target cost, Basic must reduce its total costs to maintain competitive pricing within its profit objectives.
Absorption Costing Approach to Cost-Plus Pricing; Customer Latitude and Pricing Messina Company wants to use absorption cost-plus pricing to establish the selling price for a new product. The company plans to invest $650,000 in operating assets that provide the capacity to make 30,000 units. Its required return on investment (ROI) in its operating assets is 20%. Messina’s Accounting Department set a goal of producing and selling 20,000 units during the new product’s first year of availability. It also provided the following cost estimates for the new product: Required: 1. If the company plans to produce and sell 20,000 units, what is the absorption unit product cost for its new product? 2. At a planned sales volume of 20,000 units, what is the markup percentage on absorption cost for the new product? 3. Using absorption cost-plus pricing and assuming a planned sales volume of 20,000 units, what selling price would the company establish for its new product? 4. Using an absorption…
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.
1. What is the differential cost to manufacture part Q? 2. What is the cost savings from manufacturing Part Q?
Target Costing Laser Impressions Inc. manufactures color laser printers. Model 320 presently sells for $350 and has a product cost of $280, as follows: Direct materials $200 Direct labor 50 Factory overhead 30 Total $280 It is estimated that the competitive selling price for color laser printers of this type will drop to $330 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas: 1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit. 2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $7 per unit. 3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 40% of the factory overhead are related to running injection molding…
Requirements: What is the margin of safety as percentage and in unit? Assume that next month management wants the company to earn a profit of $80,000. How many units will have to be sold to meet the target profit?

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