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4. (Appendix) Assuming that the variable cost method is used, determine the following: a. Variable cost amount per unit b. Markup percentage c. Selling price per unit $ 235 53.2 X % 350

4. (Appendix) Assuming that the variable cost method is used, determine the following: a. Variable cost amount per unit b. Markup percentage c. Selling price per unit $ 235 53.2 X % 350

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 6PA: Product pricing using the cost-plus approach methods; differential analysis for accepting additional...
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Can you show me how to do question 4 and 6? 

3. (Appendix) Assuming that the total cost method is used, determine the following: a. Cost amount per unit Feedback Check My Work b. Markup percentage c. Selling price per unit 4. (Appendix) Assuming that the variable cost method is used, determine the following: a. Variable cost amount per unit b. Markup percentage c. Selling price per unit 5. The cost-plus approach price computed above should be viewed as a general guideline for establishing long- run normal prices; however, other considerations, such as the price of competing products and general economic conditions of the marketplace management to establish a different short-run price. Line Item Description Revenues Costs: $ Variable manufacturing costs Profit (loss) $ $ $ $ 305 14.75 0 350 6. Assume that as of October 31, 16,000 units of flat panel displays have been produced and sold during the current year. Analysis of the domestic market indicates that 2,500 additional units are expected to be sold during the remainder of the year at the normal product price determined under the product cost method. On November 5, Digital Displays Inc. received an offer from Andes Visual Inc. for 1,000 units of flat panel displays at $225 each. Andes Visual Inc. will market the units in Peru under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Digital Displays Inc. The additional business is not expected to affect the domestic sales of flat panel displays, and the additional units could be produced using existing factory, selling, and administrative capacity. 0 235 a. Prepare a differential analysis of the proposed sale to Andes Visual Inc. If an amount is zero, enter "0". Differential Analysis Reject (Alt. 1) or Accept (Alt. 2) Order November 5 % 53.2 X % 350 Reject Order Accept Order (Alternative 1) (Alternative 2) 0 225,000 190,000 X Differential Effects (Alternative 2) $ 225,000 35,000 X $ I -190,000 X could lead 35,000 X
Transcribed Image Text:3. (Appendix) Assuming that the total cost method is used, determine the following: a. Cost amount per unit Feedback Check My Work b. Markup percentage c. Selling price per unit 4. (Appendix) Assuming that the variable cost method is used, determine the following: a. Variable cost amount per unit b. Markup percentage c. Selling price per unit 5. The cost-plus approach price computed above should be viewed as a general guideline for establishing long- run normal prices; however, other considerations, such as the price of competing products and general economic conditions of the marketplace management to establish a different short-run price. Line Item Description Revenues Costs: $ Variable manufacturing costs Profit (loss) $ $ $ $ 305 14.75 0 350 6. Assume that as of October 31, 16,000 units of flat panel displays have been produced and sold during the current year. Analysis of the domestic market indicates that 2,500 additional units are expected to be sold during the remainder of the year at the normal product price determined under the product cost method. On November 5, Digital Displays Inc. received an offer from Andes Visual Inc. for 1,000 units of flat panel displays at $225 each. Andes Visual Inc. will market the units in Peru under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Digital Displays Inc. The additional business is not expected to affect the domestic sales of flat panel displays, and the additional units could be produced using existing factory, selling, and administrative capacity. 0 235 a. Prepare a differential analysis of the proposed sale to Andes Visual Inc. If an amount is zero, enter "0". Differential Analysis Reject (Alt. 1) or Accept (Alt. 2) Order November 5 % 53.2 X % 350 Reject Order Accept Order (Alternative 1) (Alternative 2) 0 225,000 190,000 X Differential Effects (Alternative 2) $ 225,000 35,000 X $ I -190,000 X could lead 35,000 X
Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional Business Digital Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $6,000,000 in assets. The costs of producing and selling 20,000 units of flat panel displays are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total variable cost per unit Fixed costs: Factory overhead $1,000,000 Selling and administrative expenses 400,000 Required: $120 30 50 35 Digital Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Digital Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% return on invested assets. $235 Note: Round all markup percentages to two decimal places, if required. Round all costs per unit and selling prices per unit to the nearest whole dollar. 1. Determine the amount of desired profit from the production and sale of flat panel displays. $900,000 a. Cost amount per unit 2. Assuming that the product cost method is used, determine the following: a. Cost amount per unit b. Markup percentage c. Selling price per unit 3. (Appendix) Assuming that the total cost method is used, determine the following: b. Markup percentage c. Selling price per unit $ 250 40 350 305 14.75 350 % %
Transcribed Image Text:Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional Business Digital Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $6,000,000 in assets. The costs of producing and selling 20,000 units of flat panel displays are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total variable cost per unit Fixed costs: Factory overhead $1,000,000 Selling and administrative expenses 400,000 Required: $120 30 50 35 Digital Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Digital Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% return on invested assets. $235 Note: Round all markup percentages to two decimal places, if required. Round all costs per unit and selling prices per unit to the nearest whole dollar. 1. Determine the amount of desired profit from the production and sale of flat panel displays. $900,000 a. Cost amount per unit 2. Assuming that the product cost method is used, determine the following: a. Cost amount per unit b. Markup percentage c. Selling price per unit 3. (Appendix) Assuming that the total cost method is used, determine the following: b. Markup percentage c. Selling price per unit $ 250 40 350 305 14.75 350 % %
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