Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 12, Problem 12E
Exercise 4-11A How the allocation of fixed cost affects a pricing decision
Arrow Manufacturing Co. expects to make 50.000 chairs during the 2017 accounting period. The company made 3,000 chairs in January. Materials and labor costs for January were $36,000 and $48,000, respectively. Arrow produced 4,000 chairs in February. Material and labor costs for February were $48,000 and $60,000, respectively. The company paid the $480,000 annual rental fee on its manufacturing facility on January 1, 2017.
Required
Assuming that Arrow desires to sell its chairs for cost plus 40 percent of cost, what price should be charged for the chairs produced in January and February?
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Students have asked these similar questions
Exercise 4-11A (Algo) How the allocation of fixed cost affects a pricing decision LO 4-3
Benson Manufacturing Company expects to make 30,100 chairs during the Year 1 accounting period. The company made 4,500 chairs
in January. Materials and labor costs for January were $17,300 and $24,300, respectively. Benson produced 2,100 chairs in February.
Material and labor costs for February were $9,400 and $12,700, respectively. The company paid the $421,400 annual rental fee on its
manufacturing facility on January 1, Year 1. The rental fee is allocated based on the total estimated number of units to be produced
during the year.
Required
Assuming that Benson desires to sell its chairs for cost plus 20 percent of cost, what price should be charged for the chairs produced
in January and February?
Note: Round intermediate calculations and final answers to 2 decimal places.
January
Price per unit
February
Exercise 12-12A (Algo) How the allocation of fixed cost affects a pricing decision LO 12-3
Jordan Manufacturing Co. expects to make 31,000 chairs during the year 1 accounting period. The company made 4,100 chairs in
January. Materials and labor costs for January were $17,600 and $24,700, respectively. Jordan produced 1,100 chairs in February.
Material and labor costs for February were $9,500 and $12,300, respectively. The company paid the $775,000 annual rental fee on its
manufacturing facility on January 1, year 1. The rental fee is allocated based on the total estimated number of units to be produced
during the year.
Required
Assuming that Jordan desires to sell its chairs for cost plus 25 percent of cost, what price should be charged for the chairs produced in
January and February? (Round intermediate calculations and final answers to 2 decimal places.)
Price per unit
January
February
QS 23-18 (Algo) Pricing using variable
GoSnow sells snowboards. Each snowboard requires direct materials of $134, direct labor of $47, variable overhead of $57, and
variable selling, general, and administrative costs of $22. The company has fixed overhead costs of $277,000 and fixed selling,
general, and administrative costs of $347,000. The company has a target profit of $416,000. It expects to produce and sell 10,000
snowboards.
Compute the selling price per unit using the variable Cost method. (Round your intermediate calculations and final answer to nearest
whole dollar amounts.)
Selling price
$
342 per unit
Chapter 12 Solutions
Survey Of Accounting
Ch. 12 - 1.What is a cost object? Identify four different...Ch. 12 - Prob. 2QCh. 12 - 3.If the cost object is a manufactured product,...Ch. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - 10.Why are some manufacturing costs not directly...
Ch. 12 - Prob. 11QCh. 12 - 12.On January 31, the managers of Integra, Inc....Ch. 12 - 13.Respond to the following statement: The...Ch. 12 - Prob. 14QCh. 12 - Define the term cost pool. How are cost pools...Ch. 12 - LO 4-1Exercise 4-1A Direct versus indirect costs...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Exercise 4-4APooling overhead cost Ware...Ch. 12 - Prob. 5ECh. 12 - Exercise 4-5A Allocating overhead cost among...Ch. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Exercise 4-6AAllocating overhead costs among...Ch. 12 - Exercise 4-9AAllocating to solve a timing problem...Ch. 12 - Prob. 11ECh. 12 - Exercise 4-11AHow the allocation of fixed cost...Ch. 12 - Prob. 13ECh. 12 - Problem 4-17A Cost accumulation and allocation...Ch. 12 - Problem 4-18A Selecting an appropriate cost driver...Ch. 12 - Problem 4-19A Cost allocation in a service...Ch. 12 - Prob. 17PCh. 12 - Problem 4-21A Allocation to accomplish smoothing...Ch. 12 - Problem 4-22A Allocating indirect costs between...Ch. 12 - Prob. 20PCh. 12 - Prob. 1ATCCh. 12 - Prob. 2ATCCh. 12 - ATC 4-3 Research Assignment Using real-world data...Ch. 12 - Prob. 4ATCCh. 12 - Prob. 5ATC
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