4 a. Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Management believes that in order to be competitive in world markets, the price of the electronic calculator that the company is developing cannot exceed $15. Shimada’s required rate of return is 12% on all investments. An investment of $5,000,000 would be required to purchase the equipment needed to produce the 300,000 calculators that management believes can be sold each year at the $15 price. Required: Compute the target cost of one calculator b. Poskey Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Costs: Wages and salaries ............ $400,000 Depreciation ...................... 160,000 Utilities .............................. 100,000 Total ................................... $660,000 Distribution of resource consumption: Activity Cost Pools Assembly Setting Up Other Total Wages and salaries .............. 40% 40% 20% 100% Depreciation ........................ 20% 35% 45% 100% Utilities ................................ 25% 55% 20% 100% How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?
4 a. Shimada Products Corporation of Japan is anxious to enter the electronic calculator
market. Management believes that in order to be competitive in world markets, the
price of the electronic calculator that the company is developing cannot exceed $15.
Shimada’s required
$5,000,000 would be required to purchase the equipment needed to produce the
300,000 calculators that management believes can be sold each year at the $15 price.
Required:
Compute the target cost of one calculator
b. Poskey Corporation uses an activity-based costing system with three activity cost
pools. The company has provided the following data concerning its costs and its
activity based costing system:
Costs:
Wages and salaries ............ $400,000
Utilities .............................. 100,000
Total ................................... $660,000
Distribution of resource consumption:
Activity Cost Pools
Assembly Setting Up Other Total
Wages and salaries .............. 40% 40% 20% 100%
Depreciation ........................ 20% 35% 45% 100%
Utilities ................................ 25% 55% 20% 100%
How much cost, in total, would be allocated in the first-stage allocation to the
Assembly activity cost pool?
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