Bonita Products desires to set a target price for its newest product. Information for a budgeted volume of 8,000 units is shown below. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $ 146 $ $ 71 96 $ 45 Total $ 50,000 $ 70,000 Bonita Products uses cost-plus pricing and management wants a 25% ROI on the new product. Assets of $1,400,000 are committed to production of the new product.

Bonita Products desires to set a target price for its newest product. Information for a budgeted volume of 8,000 units is shown below. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $ 146 $ $ 71 96 $ 45 Total $ 50,000 $ 70,000 Bonita Products uses cost-plus pricing and management wants a 25% ROI on the new product. Assets of $1,400,000 are committed to production of the new product.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 3PB: TIB makes custom guitars and prepared the following sales budget for the second quarter It also has...

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Uchdorf Manufacturing just completed a study of its purchasing activity with the objective of improving its efficiency. The driver for the activity is number of purchase orders. The following data pertain to the activity for the most recent year: Activity supply: five purchasing agents capable of processing 2,400 orders per year (12,000 orders) Purchasing agent cost (salary): 45,600 per year Actual usage: 10,600 orders per year Value-added quantity: 7,000 orders per year Required: 1. Calculate the volume variance and explain its significance. 2. Calculate the unused capacity variance and explain its use. 3. What if the actual usage drops to 9,000 orders? What effect will this have on capacity management? What will be the level of spending reduction if the value-added standard is met?
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