What is the target cost if target profit is 25% of sales and ECC must meet the competitive price of $400?
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Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" video player for a price of $430. It costs ECC $300 to make the player. ECC's main competitor is coming to market with a new video player that will sell for a price of $400. ECC feels that it must reduce its price to $400 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 19%. ECC currently sells 218,000 video players per year.
What is the target cost if target profit is 25% of sales and ECC must meet the competitive price of $400?
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- Titan Computer Company manufactures a tablet computer called All Pad. The company sells these tablets through large big box retailers. This tablet computer is less expensive than similar products sold by All Pad’s competitors and has 16GB of internal storage compared to 32GB or more as offered by Pear Corporation, the leading competitor. The Titan Computer Company has recently experienced some increased production costs resulting from significant rework, whereas Pear’s reputation for quality is unmatched, and the company sells its product at a significantly higher price point than the All Pad. Titan Computer Company would like to improve quality and decrease costs. Your group has been tasked as a committee to produce a plan to accomplish this by improving processes and training production workers to reduce rework and failed quality inspections. Your committee believes that increasing quality will ultimately increase sales by at least 3% annually. For each strategic objective, suggest a…Titan Computer Company manufactures a tablet computer called AllPad. The company sells these tablets through large big box retailers. This tablet computer is less expensive than similar products sold by AllPad’s competitors and has 16GB of internal storage compared to 32GB or more as offered by Pear Corporation, the leading competitor. The Titan Computer Company has recently experienced some increased production costs resulting from significant rework, whereas Pear’s reputation for quality is unmatched, and the company sells its product at a significantly higher price point than the AllPad.Titan Computer Company would like to improve quality and decrease costs. Your group has been tasked as a committee to produce a plan to accomplish this by improving processes and training production workers to reduce rework and failed quality inspections. Your committee believes that increasing quality will ultimately increase sales by at least 3% annually.Document the following.Is Titan Computer…The Chromosome Manufacturing Company produces two products, X and Y. The company president, Gene Mutation, is concerned about the fierce competition in the market for product X. He notes that competitors are selling X for a price well below Chromosome's price of P12.70. At the same time, he notes that competitors are pricing product Y almost twice as high as Chromosome's price of P12.50. Mr.Mutation has obtained the following data for a recent time period: Product X Product Y Number of units 11,000 3,000 Direct Materials cost per unit P3.23 P3.09 Direct Labor cost per unit P2.22 P2.10 Direct Labor hours 10,000 2,500 Machine hours 2,100 2,800 Inspection hours 80 100 Purchase orders 10 10 Mr. Mutation has learned that overhead costs are assigned to products on the basis of direct labor hours. The overhead costs for his time period consisted of the following items: Overhead Cost item Amount Inspection Costs P16,200 Purchasing Costs 8,000 Machine Cost…
- Apple Incorporated, the worlds leading manufacturer of mobile phones, currently sells their cellphones for 90,000 per unit. This phone costs 60,000 to manufacture. Pineapple Company, the second leading manufacturer of cellphones, revealed that they would be unveiling a new model of phone that will sell for 70,000. This new phone contains all the features and performs at par with Apple’s phones. To keep up with the competition, Apple management believes that they should lower the price to 70,000. The Marketing Department also believes that the new price will cause sales to increase by 10% even with a new cellphone in the market. Apple currently sells 150,000 units of their phones annually. What is the target cost of Apple’s products if the target operating income is 20% of sales?The Chromosome Manufacturing Company produces two products, X and Y. The company president, Gene Mutation, is concerned about the fierce competition in the market for product X. He notes that competitors are selling X for a price well below Chromosome's price of P12.70. At the same time, he notes that competitors are pricing product Y almost twice as high as Chromosome's price of P12.50. Mr. Mutation has obtained the following data for a recent time period: PRODUCT X PRODUCT Y Number of Units 11,000 3,000 Direct Materials Cost Per Unit 3.23 3.09 Direct Labor Cost Per Unit 2.22 2.10 Direct Labor Hours 10,000 2,500 Machine Hours 2,100 2,800 Inspection Hours 80 100 Purchase Orders 10 10 Mr. Mutation has learned that overhead costs are assigned to products on the basis of direct labor hours. The overhead costs for his time period consisted of the following items: Overhead Cost Item Amount Inspecting Costs…The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a price of $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income. Q. What is the maximum transfer price at which the AD manager would be willing to purchase screens from the SD?
- The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a price of $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income. Q. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD?Sony manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $60 per screen. The SD can sell all its output to the outside market at a price of $110 per screen, after incurring a variable marketing and distribution cost of $10 per screen. If the AD purchases screens from outside suppliers at a price of $110 per screen, it will incur a variable purchasing cost of $8 per screen. Sony’s division managers can act autonomously to maximize their own division’s operating income. Required: What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD? What is the maximum transfer price at which the AD manager would be willing to purchase screens from the SD? Now suppose that the SD can sell only 80% of its output capacity of 10,000 screens per month on the open market.…Bigdeal Corporation manufactures paper and paper products and istrying to decide whether to purchase Smalltek Company. Smalltek has developed a process for manufacturing boxes that can replace containers that use fluorocarbons for expelling a liquid product. The price may be as high as $45 million. Bigdeal prefers to buy Smalltek and integrate its products while leaving the Smalltek management in charge of day-to-dayoperations. A major consideration is the efficiency and effectiveness of Smalltek’s operations. Bigdeal wants to obtain a report on the operational efficiency and effectiveness of the Smalltek sales, production, and research and development departments.Required:Who can Bigdeal engage to produce the report resulting from this operational audit? Several possibilities exist. Are there any particular advantages or disadvantages in choosing from among them?
- Comdex Inc. manufactures parts for the telecom industry. One of its products that currently sells for $160 is now facing a new competitor that offers the same product for $140. The parts currently cost Comdex $130. Comdex believes it must reduce its price to $140 to remain competitive. What is the target cost of the product if Comdex desires a 25% profit on sales dollars?The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a price of $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income. Q. Now suppose that the SD can sell only 70% of its output capacity of 20,000 screens per month on the open market. Capacity cannot be reduced in the short run. The AD can assemble and sell more than 20,000 TV sets per month. a. From the point of view of Slate’s management, how much of the SD output should be transferred to the AD?The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a price of $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income. Q. Now suppose that the SD can sell only 70% of its output capacity of 20,000 screens per month on the open market. Capacity cannot be reduced in the short run. The AD can assemble and sell more than 20,000 TV sets per month. a. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD?