Columbus Inc. sells a high end hair dryer in a super competitive marketplace. As a result, market research and competitive pressures influence the determination of their selling price. Their marketing department has done a comprehensive analysis and It looks like a price of $57 would be appropriate given the present business environment. The company has a goal of earning $28 on each unit. What is the target unit cost of each hair dryer? Enter your answers without dollar signs or commas.
Q: Market research indicates that a cover like this would sell well in the market priced at $17.00.…
A: Operating Profit means profit generated by a company from its core operations before the deduction…
Q: Sadida (Pty) Ltd sells different grades of cheese to the general public as well as to other…
A: EOQ's full form is Economic Order Quantity. EOQ means that the quantity of inventory when purchased…
Q: Company XYZ is specialized in producing and selling smart watches. The company currently has two…
A: Sales:-It is the grand total sales obtained by adding and subtracting all related discounts and…
Q: Company XYZ is specialized in producing and selling smart watches. The company currently has two…
A: The commission based on determining selling price does not guarantee that the company is making…
Q: Jim Salters, the COO of CryoDerm, has asked his cost management team for a product-line…
A: Life cycle costing is a method to determine the profitability of a product over its life.
Q: small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of…
A: As describe in the in the question 2 in the whole question, a small nearby upholstering company…
Q: Ahmad Inc. is a toy manufacturing firm and has the following information: Activity levels Total…
A: Cost-volume-profit analysis is made to assess the level of cost and profit at various levels of…
Q: Ledfords is a chain of home improvement stores. Suppose Ledfords is trying to decide whether to…
A: Requirement 1:
Q: San De Marco Company has a very unique product with no real competitors, therefore they use cost…
A: Cost plus pricing is a method of setting selling price where, selling price is set by adding a…
Q: Brandon Production is a small firm focused on the assembly and sale of custom computers. The firm is…
A:
Q: Casas Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently,…
A: Introduction: The last line of the financial statements is net income. However, some income…
Q: As the owner of the small business, you are tasked to determine the right price for your product…
A: As the owner of the small business, you are tasked to determine the right price for your product…
Q: Determine the differential income or loss per pair of boots from selling to the organization. $…
A: Given is: Normal selling price = $30 per pair Offered selling price = $22 per pair
Q: a. Calculate selling prices for each of the Citizen, the Sovereign and the Excelsior using the…
A: Allocating all of the direct expenses related to producing a good to COGS is known as absorption…
Q: Jim Salters, the C00 of CryoDerm, has asked his cost management team for a product-line…
A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…
Q: The Junior League of Yadkinville, California, collected recipes from members and published a…
A: The answer is 13 per unit For solution please see the next step
Q: Meg's Manufacturing Company can make 211 units of a component part for variable costs of $159,896…
A: Make Alternative Buy Alternative Difference Buying Cost $0 $1,53,734 -$1,53,734 Variable costs…
Q: It's Your Turn. Show Us What You Know Shannon's Brewery in Keller, Texas is considering using a…
A: Let the level of sales be ‘$ X’. At $ X level, the cost of hiring outside sales force and cost of…
Q: Alyssa Stuart is thinking of starting a store that specializes in handmade Viennese style bentwood…
A: Contribution margin It is the amount excess of variable cost. Contribution margin is calculated as…
Q: Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability…
A: solution : calculation of profit before taxes for the Bskin product, per life-cycle income…
Q: Rumba Dance Hall has offered to buy from Muy Bueno Bakery 100 of their chocolate cakes for $25 each.…
A: Differential income is refers to the difference in incomes compared in different alternatives.
Q: A small company manufactures a certain item and sells it online. The company has a business model…
A: Every company exists to make a profit and achieve outcomes. In order to analyse profitability,…
Q: Mortlake Bottlers wants to sell a new flavor of bottled tea. Per 16 ounce bottle there are the…
A: a) Computation of Target Cost, Target Profit and Selling Price Glass Bottles $0.50 Brewed Tea…
Q: Company XYZ is specialized in producing and selling smart watches. The company currently has two…
A: Answer
Q: Given the following information for the Rajin’ Cajun line, what is management’s best option for…
A: Operating income refers to the income or gross profit generated by the company from its operations…
Q: Tennis Products, Inc., produces three models of high-quality tennis rackets. The following table…
A:
Q: Sportsbags Inc. makes and sells hockey bags for students. Financial projections for this line of…
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Grant's Western Wear is a retailer of western hats located in Atlanta, Georgia. Although Grant's…
A: Contribution per unit = $ 44.00- $ 24.80= $19.2 BEP (in Units) = Fixed cost/ Contribution per unit =…
Q: Maverick Inc. Is deciding on which suppller to choose for one of Its components, Suppliers have…
A: Commissions refers to a form of variable-pay remuneration for services rendered or products sold by…
Q: Company has started producing and selling drones to consumers. their goal was to optimize their…
A: Please refer to the image below.
Q: The Razooks Company, which manufactures office equipment, is ready to introduce a new line of…
A: Variable manufacturing cost 180 Applied fixed manufacturing cost 60 Variable selling and…
Q: Grant's Western Wear is a retailer of western hats located in Atlanta, Georgia. Although Grant's…
A: A trade or investment's breakeven point (break-even price) is determined by comparing an asset's…
Q: Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability…
A: Profit before taxes can be calculated by deducting research and development expenses and selling…
Q: Muhammad Raza company is a producer of pastries. The company hires an economist to determine the…
A: The demand mechanism states that if all other factors like income, likings, economical…
Q: Bubba's Western Cover is a western hat retailer in El Paso, Texas. Although Bubba's carries numerous…
A: Margin of safety means the difference between the budget sales and breakeven sales. It means the…
Q: Brownstone Windows is a small company that installs windows. Its cost structure is as follows: E…
A: Margin of safety means sales revenue over and above break even point sales revenue.
Q: Traylor Windows' breakeven revenues is $1,870,000 and breakeven units is 3,400. Calculate the…
A: Margin of safety is the excess of revenue earned by company compared to break even revenue.
Q: Berwin Inc. is a small industrial equipment manufacturer with approximately $3.5 million in annual…
A: Introduction: Return on investment (ROI) or return on costs (ROC) is the ratio of net income to…
Q: What absolute increase in unit sales and revenue would be necessary to recoup the incremental…
A: Total sales unit in option (a) 1,250,000 Total sales unit in option (b) 1,500,000
Q: You are the Sales Manager for your company and you are evaluating orders from two customers but can…
A: Total Contribution margin on first order = No. of units x selling price x contribution margin ratio…
Q: The WalkRite Shoe Company operates a chain of shoe stores that sell men's shoes with identical unit…
A: Breakeven (BE) point is a stage where firm’s total revenue is same as total firm’s cost or firm…
Q: Stylish Sitting is a retailer of office chairs located in San Francisco, California. Due to…
A: Surplus or deficit in the income statement is the excess or shortfall of operating income of the…
Q: Columbus Inc. sells a high end hair dryer in a super competitive marketplace. As a result, market…
A: Profit per Unit = Selling Price - Unit Cost
Q: Santana Rey has found that Business Solutions’s line of computer desks and chairs has become…
A: Given that: Limited direct labour hours = 1015
Q: Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability…
A: % of allocation of research and development and selling expense to Bskin = 100% - 75% = 25%…
Q: A company operates in a competitive marketplace. They look to the market to determine their selling…
A: Solution:- Calculation of target cost as follows under:- The following formula used to calculate…
Q: Jay White works for Nelson Design Paperworks Limited, as a marketing manager for a division that…
A: In order to determine the most profitable range for both the processes, the break-even points needs…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- The Chocolate Baker specializes in chocolate baked goods. The firm has long assessed the profitability of a product line by comparing revenues to the cost of goods sold. However, Barry White, the firms new accountant, wants to use an activity-based costing system that takes into consideration the cost of the delivery person. Following are activity and cost information relating to two of Chocolate Bakers major products: Using activity-based costing, which of the following statements is correct? a. The muffins are 2,000 more profitable. b. The cheesecakes are 75 more profitable. c. The muffins are 1,925 more profitable. d. The muffins have a higher profitability as a percentage of sales and, therefore, are more advantageous.Danna Wise, president of Tidwell Company, recently returned from a conference on quality and productivity. At the conference, she was told that many American firms have quality costs totaling 20 to 30% of sales. The quality experts at the conference convinced her that a company could increase its profitability by improving quality. However, she was of the opinion that the quality of Tidwell Company was much less than 20%probably more in the 4 to 6% range. However, because the potential for increasing profits was so great if she was wrong, she decided to request a preliminary estimate of the total quality costs currently being incurred. She asked her controller for a summary of quality costs, with the costs classified into four categories: prevention, appraisal, internal failure, or external failure. She also wanted the costs expressed as a percentage of both sales and profits. The controller had his staff assemble the following information from the past year, 20X1: a. Sales revenue, 37,240,000; net income, 4,000,000. b. During the year, customers returned 40,000 units needing repair. Repair cost averages 9 per unit. c. Twelve inspectors are employed, each earning an annual salary of 80,000. The inspectors are involved only with final inspection (product acceptance). d. Total scrap is 200,000 units. Of this total, ninety percent is quality related. The cost of scrap is about 10 per unit. e. Each year, approximately 800,000 units are rejected in final inspection. Of these units, seventy-five percent can be recovered through rework. The cost of rework is 1.80 per I unit. f. A customer cancelled an order that would have increased profits by 600,000. The customers reason for cancellation was poor product performance. g. The company employs 10 full-time employees in its complaint department. Each earns 48,600 a year. h. The company gave sales allowances totaling 180,000 due to substandard products being sent to the customer. i. The company requires all new employees to take its 4-hour quality training program. The estimated annual cost of the program is 120,000. Required: 1. Prepare a simple quality cost report classifying costs by category. 2. Compute the quality cost-sales ratio. Also, compare the total quality costs with total profits. Should Danna be concerned with the level of quality costs? 3. Prepare a pie chart for the quality costs. Discuss the distribution of quality costs among the four categories. Are they properly distributed? Explain. 4. Discuss how the company can improve its overall quality and at the same time reduce total quality costs. 5. By how much will profits increase if quality costs are reduced to 3% of sales?Kelson Sporting Equipment, Inc., makes two types of baseball gloves: a regular model and a catchers model. The firm has 900 hours of production time available in its cutting and sewing department, 300 hours available in its finishing department, and 100 hours available in its packaging and shipping department. The production time requirements and the profit contribution per glove are given in the following table: Assuming that the company is interested in maximizing the total profit contribution, answer the following: a. What is the linear programming model for this problem? b. Develop a spreadsheet model and find the optimal solution using Excel Solver. How many of each model should Kelson manufacture? c. What is the total profit contribution Kelson can earn with the optimal production quantities? d. How many hours of production time will be scheduled in each department? e. What is the slack time in each department?
- Colin OShea has a carpentry shop that employs 4 carpenters. Colin received an order for 1,000 coffee tables. The coffee tables have a round table top and four decorative legs. An offer for $500 per table was received. Colin found an unfinished round table top that he could buy for $50 each. A. Using this quantitative cost data to make the table top, should Colin buy the table top or make it? B. What qualitative factors would be included in your decision. B. Can the vendor make it to the same quality standards? Can it be completed on time? Is there idle capacity in the factory that could be used?Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help in organizing its inventory. Due to the steep learning curve required to use the new software, Garrison must decide between hiring two part-time college students or one full-time employee. Each college student would work 20 hours per week, and would earn $1 S per hour. The full-time employee would work 40 hours per week and would earn $15 per hour plus the equivalent of $2 per hour in benefits. Employees are given two polo shirts to wear as their uniform. The polo-shirts cost Garrison $10 each. What are the relevant costs, relevant revenues, sunk costs, and opportunity costs for Garrison?Florentino Allers is the production manager of Electronics Manufacturer. Due to limited capacity, the company can only produce one of two possible products: An industrial motherboard with a 75% probability of making a profit of $1 million and a 25% probability of making a profit of $150,000 A regular motherboard with a 100% chance of making a profit of $710,000 Florentino will get a 20% bonus from his department. Florentino has the responsibility to choose between the two products and is more of a risk-taker, more so than most of the top management at Electronics Manufacturer. A. Which option is Florentino more likely to choose and why? B. Which option would the company be more likely to choose and why? C. What changes should the company make to Florentinos compensation to avoid unnecessary risks?
- Oleg Markov is the production manager of NASA Solvents. Due to limited capacity, the company can only produce one of two possible products: an industrial concentrated solvent with a 15% probability of making a profit of $1 million and an 85% probability of making a profit of $200,000 a household diluted solvent with a 100% chance of making a profit of $310,000 Oleg will get a 20% bonus from his department. Oleg has the responsibility to choose between the two products and is more risk averse than most of the top management at NASA Solvents. A. Which option is Oleg more likely to choose and why? B. Which option would the company be more likely to choose and why? C. What changes should the company make to Olegs compensation to encourage managers to take appropriate risksMarshall s target margin of safety be in units and dollars if they required a $14,000 margin of safety?Kimball Company has developed the following cost formulas: Materialusage:Ym=80X;r=0.95Laborusage(direct):Yl=20X;r=0.96Overheadactivity:Yo=350,000+100X;r=0.75Sellingactivity:Ys=50,000+10X;r=0.93 where X=Directlaborhours The company has a policy of producing on demand and keeps very little, if any, finished goods inventory (thus, units produced equals units sold). Each unit uses one direct labor hour for production. The president of Kimball Company has recently implemented a policy that any special orders will be accepted if they cover the costs that the orders cause. This policy was implemented because Kimballs industry is in a recession and the company is producing well below capacity (and expects to continue doing so for the coming year). The president is willing to accept orders that minimally cover their variable costs so that the company can keep its employees and avoid layoffs. Also, any orders above variable costs will increase overall profitability of the company. Required: 1. Compute the total unit variable cost. Suppose that Kimball has an opportunity to accept an order for 20,000 units at 220 per unit. Should Kimball accept the order? (The order would not displace any of Kimballs regular orders.) 2. Explain the significance of the coefficient of correlation measures for the cost formulas. Did these measures have a bearing on your answer in Requirement 1? Should they have a bearing? Why or why not? 3. Suppose that a multiple regression equation is developed for overhead costs: Y = 100,000 + 100X1 + 5,000X2 + 300X3, where X1 = direct labor hours, X2 = number of setups, and X3 = engineering hours. The coefficient of determination for the equation is 0.94. Assume that the order of 20,000 units requires 12 setups and 600 engineering hours. Given this new information, should the company accept the special order referred to in Requirement 1? Is there any other information about cost behavior that you would like to have? Explain.
- Mortech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,500 per month in fixed costs. Mortech sells 200 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $45 per unit of variable costs, plus an increase in fixed costs of $1,000 per month. The current price of the camera is $200. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings?At the beginning of the last quarter of 20x1, Youngston, Inc., a consumer products firm, hired Maria Carrillo to take over one of its divisions. The division manufactured small home appliances and was struggling to survive in a very competitive market. Maria immediately requested a projected income statement for 20x1. In response, the controller provided the following statement: After some investigation, Maria soon realized that the products being produced had a serious problem with quality. She once again requested a special study by the controllers office to supply a report on the level of quality costs. By the middle of November, Maria received the following report from the controller: Maria was surprised at the level of quality costs. They represented 30 percent of sales, which was certainly excessive. She knew that the division had to produce high-quality products to survive. The number of defective units produced needed to be reduced dramatically. Thus, Maria decided to pursue a quality-driven turnaround strategy. Revenue growth and cost reduction could both be achieved if quality could be improved. By growing revenues and decreasing costs, profitability could be increased. After meeting with the managers of production, marketing, purchasing, and human resources, Maria made the following decisions, effective immediately (end of November 20x1): a. More will be invested in employee training. Workers will be trained to detect quality problems and empowered to make improvements. Workers will be allowed a bonus of 10 percent of any cost savings produced by their suggested improvements. b. Two design engineers will be hired immediately, with expectations of hiring one or two more within a year. These engineers will be in charge of redesigning processes and products with the objective of improving quality. They will also be given the responsibility of working with selected suppliers to help improve the quality of their products and processes. Design engineers were considered a strategic necessity. c. Implement a new process: evaluation and selection of suppliers. This new process has the objective of selecting a group of suppliers that are willing and capable of providing nondefective components. d. Effective immediately, the division will begin inspecting purchased components. According to production, many of the quality problems are caused by defective components purchased from outside suppliers. Incoming inspection is viewed as a transitional activity. Once the division has developed a group of suppliers capable of delivering nondefective components, this activity will be eliminated. e. Within three years, the goal is to produce products with a defect rate less than 0.10 percent. By reducing the defect rate to this level, marketing is confident that market share will increase by at least 50 percent (as a consequence of increased customer satisfaction). Products with better quality will help establish an improved product image and reputation, allowing the division to capture new customers and increase market share. f. Accounting will be given the charge to install a quality information reporting system. Daily reports on operational quality data (e.g., percentage of defective units), weekly updates of trend graphs (posted throughout the division), and quarterly cost reports are the types of information required. g. To help direct the improvements in quality activities, kaizen costing is to be implemented. For example, for the year 20x1, a kaizen standard of 6 percent of the selling price per unit was set for rework costs, a 25 percent reduction from the current actual cost. To ensure that the quality improvements were directed and translated into concrete financial outcomes, Maria also began to implement a Balanced Scorecard for the division. By the end of 20x2, progress was being made. Sales had increased to 26,000,000, and the kaizen improvements were meeting or beating expectations. For example, rework costs had dropped to 1,500,000. At the end of 20x3, two years after the turnaround quality strategy was implemented, Maria received the following quality cost report: Maria also received an income statement for 20x3: Maria was pleased with the outcomes. Revenues had grown, and costs had been reduced by at least as much as she had projected for the two-year period. Growth next year should be even greater as she was beginning to observe a favorable effect from the higher-quality products. Also, further quality cost reductions should materialize as incoming inspections were showing much higher-quality purchased components. Required: 1. Identify the strategic objectives, classified by the Balanced Scorecard perspective. Next, suggest measures for each objective. 2. Using the results from Requirement 1, describe Marias strategy using a series of if-then statements. Next, prepare a strategy map. 3. Explain how you would evaluate the success of the quality-driven turnaround strategy. What additional information would you like to have for this evaluation? 4. Explain why Maria felt that the Balanced Scorecard would increase the likelihood that the turnaround strategy would actually produce good financial outcomes. 5. Advise Maria on how to encourage her employees to align their actions and behavior with the turnaround strategy.Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
