for the Easy Solutions calculator to remain competitive and still meet the target profit margin of the company? 2.Hugh Taylor, the newly appointed clerical assistant, thinks that the current cost of the calculator and its existing capabilities is not appropriate to achieve the target cost. Explain to Mr Taylor and the management how the company could apply the principles of product life cycle management and value engineering to achieve the target cost.
Q: You run a school in Florida. Fixed monthly cost is $5,201.00 for rent and utilities, $6,083.00 is…
A: Mainly there are two types of costs being incurred by the business. One is fixed costs and other is…
Q: What category does inventory related fraud fall into?
A: Inventory fraud refers to the fraud related to the theft of the physical items of inventory as well…
Q: Entries for Issuing No-Par Stock On February 12, Quality Carpet Inc., a carpet wholesaler, issued…
A: To prepare journal entries first we need to understand the Golden Rules of Accounting and the types…
Q: Statement of Cost of Goods Manufactured for a Manufacturing Company Cost data for Johnstone…
A: Introduction: The cost of goods manufactured is the sum of all manufacturing costs for goods…
Q: Determine the interest and due dates on notes Cora Company had the…
A: Interest Due :— It is the amount of interest due on loan. It is calculated by multiplying amount of…
Q: The company's average collection period for 2021 is (Round answers to O decimal places. Use 365 days…
A: Introduction:- Calculation of Accounts receivable turnover ratio as follows under:- Accounts…
Q: Enter negative values as negative numbers. b. Determine the amount of net income for November,…
A: Introduction: Net cash flows from operating activities are used to compute the cash flow from…
Q: The following condensed information is reported by Sporting Collectibles. Income Statement…
A: Profitability ratios are financial metrics used to assess a business ability to generate earnings…
Q: Suppose that the $ for $ spot exchange rate is 2:1, the 90day forward exchange rate is F = 2:156,…
A: Arbitrage opportunities refers to the strategy of the investment under which the investor buys as…
Q: Splish Home Improvement Company installs replacement siding, windows, and louvered glass doors for…
A: LCM is a method of valuing inventory in which businesses must value their inventory at the lesser of…
Q: Merrillville Auto Parts (MAP) has a Seat Assembly Department that uses activity-based costing. MAP's…
A: ABC system is the activity based costing system in which cost are assigned to individual activity as…
Q: Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing…
A: The main goal of every manufacturing unit and trading company is to sell more. To accomplish this…
Q: The Dairy Company produces three products from a joint processes using whole milk: butter, cheese,…
A: Joint cost arises when two or more products produces jointly and can not be separable. There are…
Q: b. What is the net decrease in cash during the month? 8,100 c. What is the net increase in retained…
A: >Requirement [f], [g] and [h] has been asked. >Net Income retained in the business is the…
Q: Daniel Hudson, the general counsel of eHarbour, has received a letter from a dissatisfied eHarbour…
A: Dispute resolution refers to the process or procedure where the methods or ways are used for…
Q: Assume Baxter Manufacturing begins January with 11 units of inventory that cost $12 each. During…
A: Introduction:- The following inventory methods used for inventory valuation as follows under:--…
Q: Q3. ANZ Company accepts from Nike a €3,600, 90-day, 6% note dated May 10 in settlement of Nike's…
A: The note receivable is the asset for the business. If note receivable is due within one year then it…
Q: Jutawan Bhd Bhd had used an office building for administrative purposes with a depreciated cost of…
A: INTRODUCTION (MFRS) Malaysian Financial Reporting Standards : The Malaysian Accounting Standards…
Q: As the manager of Speedy Supermarket, answer the following questions. (Round dollars to the nearest…
A: Markup = Markup is the Difference between a Product price and cost as a percentage of the Cost.…
Q: Discuss the effect of absorption and marginal costing on inventory valuation and profit…
A: Absorption costing also written as full costing. Under this method, all costs are considered in…
Q: Using financial statement ratios to analyze Coca-Cola and PepsiCo (Learning Objectives 1, 2, 3, & 4)…
A: Financial ratios refers to those ratios which states the line items of the financial statements into…
Q: Dewey Corporation purchased a machine for $340,000 on January 1, 2012. The machine had an…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Discuss what reason to decide whether to accept or reject a project. Your should refer to all four…
A: Decision regarding whether an investment on a project which a company is willing to take have to…
Q: The following is an accounts receivable ageing schedule for Chin Ltd. Lee Lu Sing Wong Others…
A: Bad Debt Expense :— It is the estimated bad debt for the year. It is calculated as follows :— Bad…
Q: Calculate the (1) Total Manufacturing Overhead, (2) Selling Expenses and (3) Administrative Expenses…
A: Manufacturing overheads are those costs which are indirectly involved in the process of production.…
Q: On 1 April 2019 White Bhd issued 1 million 5% convertible loan stock at RM1 million. The loan stock…
A: The conversion of loans and other liabilities into common shares of the business seems to be the…
Q: Accounting for Merchandise Inventory Purchases Journalize the…
A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…
Q: Prepare a horizontal analysis of the income statement data for Pina Colada Corporation using 2021 as…
A: Income Statement :— Income Statement is A part of the financial statement of the which include all…
Q: Business damages, as a result of financial fraud, directly impact the operations of any company.…
A: Fraud includes activities such as theft, corruption, conspiracy, bribery etc. Fraud can occur in any…
Q: Please use the following information and use it to complete a few calculations, and answer questions…
A: The short-run shut down is a circumstance in which a company shuts down its operation in the short…
Q: Concord Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an…
A: Inventory Cost :— Inventory costs are the costs to a business associated with holding stock, or…
Q: On June 1 of the current year, Chris Bates established a business to manage rental property. The…
A: An accounting equation refers to a mathematical representation of the transactions. It indicates…
Q: Splish Company began operations in 2019 and determined its ending inventory at cost and at…
A: Cost of inventory at 31 Dec 2019 $378,170 Less: Lower of cost or Market at 31 Dec 2019 $358,260…
Q: To achieve faithful representation, the financial information must be: relevant, comparable, and…
A: Lets understand the meaning of faithful representation in short. It is a representation which should…
Q: What is the present value of a constant perpetuity of 25 per year where the required rate of return…
A: A series of cash flows known as "perpetuity" which have an indefinite lifespan, and the income…
Q: Bla Limited sells inventory to its parent, Whi Limited at cost price plus 125% mark-up. • Closing…
A: Inventory refers to goods that are bought or made for sale in the usual process of doing business,…
Q: With the use of three different examples, explain why cash and profit are not the same thing.
A: Cash is the real account in accounting terms as it is current asset and profit is…
Q: Yada expects total sales of $365,000 in January and $390,000 in February. Assume that Yada's sales…
A: Cash Budget :— A cash budget is an estimation of the cash flows of a business over a specific…
Q: The following data is provided for Garcon Company and Pepper Company for the year en Garcon Company…
A: Income statement is the financial statement which is prepared by an entity to know the gross and net…
Q: A firm with an AA rating likes to issue one million units of a 10 year-2% bond with face value $100.…
A: Note: Hi! Thank you for the question, As per the honor code, we are allowed to answer three…
Q: The term 'break even' point is defined as when: A. fixed costs equal total revenues B. variable…
A: The formula for calculating the break even point in units: Break Even Point (in Units)=Fixed…
Q: Return on Equity* Return on Capital Employed* Gross profit margin Operating profit margin Interest…
A: Ratios are the measures that are determined and analyzed to know the financial position of the…
Q: Question 8.5 Downward Dog Yoga is a manufacturer of yoga apparel. It produces all of its products…
A:
Q: final answers to O decimal places, e.g. 6,548.) wentory $ (1) FIFO $ (2) LIFO S (3) Average-cost
A: Ending inventory refers to the sum value of goods or products remaining at a company after making…
Q: Refer to the following selected financial information from Gomez Electronics. Compute the compa…
A: Return on total asset is percentage of earning on average assets. Average assets means average of…
Q: efine the term materiality and explain why it may be d
A: Materiality is quite important in preparing the financial statement and it is very important to the…
Q: Which of the following audit procedures is least effective for detecting unrecorded long-term debt…
A: Lets understand the basics. Management needs to perform an audit procedure in order to express an…
Q: Disparate-impact discrimination occurs when a protected class is adversely affected by the practice…
A: Even when an employer intends to have a positive influence on all protected classes, disparate…
Q: KLT Equipment, Inc. reported the following data for 2024: (Click the icon to view the data.) Compute…
A: The cash flow statement is one of the financial statements, that records the cash flow from various…
Q: Bradford Company is considering an investment opportunity with the following expected net cash…
A: Net present value is difference between present value of cash inflows and outflows. If net present…
Easy Solutions limited manufactures electronic calculators. One of its top-selling calculators has a price of $50. Recently, a competitor entered the market and started offering a similar calculator at a price that is 20% below the $50 price of Easy Solutions. Company policy requires Easy Solutions to have a profit margin
equal to 30% on sales of each of its products.
1.What target cost would have to be set for the Easy Solutions calculator to remain competitive and still meet the target profit margin of the company?
2.Hugh Taylor, the newly appointed clerical assistant, thinks that the current cost of the calculator and its existing capabilities is not appropriate to achieve the target cost. Explain to Mr Taylor and the management how the company could apply the principles of product life cycle management and value engineering to
achieve the target cost.
Step by step
Solved in 3 steps with 1 images
- Marchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?Harvey Company produces two models of blenders: the Super Model (priced at 400) and the Special Model (priced at 200). Recently, Harvey has been losing market share with its Special Model because of competitors offering blenders with the same quality and features but at a lower price. A careful market study revealed that if Harvey could reduce the price of its Special Model to 180, it would regain its former share of the market. Management, however, is convinced that any price reduction must be accompanied by a cost reduction of the same amount so that per-unit profitability is not affected. Earl Wise, company controller, has indicated that poor overhead costing assignments may be distorting managements view of each products cost and, therefore, the ability to know how to set selling prices. Earl has identified the following overhead activities: machining, inspection, and rework. The three activities, their costs, and practical capacities are as follows: The consumption patterns of the two products are as follows: Harvey assigns overhead costs to the two products using a plantwide rate based on machine hours. Required: 1. Calculate the unit overhead cost of the Special Model using machine hours to assign overhead costs. Now, repeat the calculation using ABC to assign overhead costs. Did improving the accuracy of cost assignments solve Harveys competitive problem? What did it reveal? 2. Now, assume that in addition to improving the accuracy of cost assignments, Earl observes that defective supplier components are the root cause of both the inspection and rework activities. Suppose further that Harvey has found a new supplier that provides higher-quality components such that inspection and rework costs are reduced by 50 percent. Now, calculate the cost of the Special Model (assuming that inspection and rework times are also reduced by 50 percent) using ABC. The relative consumption patterns also remain the same. Comment on the difference between ABC and ABM.Keleher Industries manufactures pet doors and sells them directly to the consumer via their web site. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
- 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?Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas City, and the other in Tulsa. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for 1,620. Sales volume averages 20,000 units per year in each plant. Recently, the Kansas City plant reduced the price of the tilt model to 1,440. Discussion with the Kansas City manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called non-value-added costs. The Kansas City manufacturing and selling costs for the tilt model were 1,260 per unit. The Kansas City manager offered to loan the Tulsa plant his cost accounting manager to help it achieve similar results. The Tulsa plant manager readily agreed, knowing that his plant must keep pacenot only with the Kansas City plant but also with competitors. A local competitor had also reduced its price on a similar model, and Tulsas marketing manager had indicated that the price must be matched or sales would drop dramatically. In fact, the marketing manager suggested that if the price were dropped to 1,404 by the end of the year, the plant could expand its share of the market by 20 percent. The plant manager agreed but insisted that the current profit per unit must be maintained. He also wants to know if the plant can at least match the 1,260 per-unit cost of the Kansas City plant and if the plant can achieve the cost reduction using the approach of the Kansas City plant. The plant controller and the Kansas City cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices. Required: 1. Calculate the target cost for expanding the Tulsa plants market share by 20 percent, assuming that the per-unit profitability is maintained as requested by the plant manager. 2. Calculate the non-value-added cost per unit. Assuming that non-value-added costs can be reduced to zero, can the Tulsa plant match the Kansas City per-unit cost? Can the target cost for expanding market share be achieved? What actions would you take if you were the plant manager? 3. Describe the role that benchmarking played in the effort of the Tulsa plant to protect and improve its competitive position.Syntech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,500 per month in fixed costs. Syntech sells 100 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 $160. 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?
- Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000Boxer Production, Inc., is in the process of considering a flexible manufacturing system that will help the company react more swiftly to customer needs. The controller, Mick Morrell, estimated that the system will have a 10-year life and a required return of 10% with a net present value of negative $500,000. Nevertheless, he acknowledges that he did not quantify the potential sales increases that might result from this improvement on the issue of on-time delivery, because it was too difficult to quantify. If there is a general agreement that qualitative factors may offer an additional net cash flow of $150,000 per year, how should Boxer proceed with this Investment?
- Shelby Industries has a capacity to produce 45.000 oak shelves per year and is currently selling 40,000 shelves for $32 each. Martin Hardwoods has approached Shelby about buying 1,200 shelves for a new project and is willing to pay $26 each. The shelves can be packaged in bulk; this saves Shelby $1.50 per shelf compared to the normal packaging cost. Shelves have a unit variable cost of $27 with fixed costs of $350,000. Because the shelves dont require packaging, the unit variable costs for the special order will drop from $27 per shelf to $25.50 per shelf. Shelby has enough idle capacity to accept the contract. What is the minimum price per shelf that Shelby should accept for this special order?Carpetland salespersons average 8,000 per week in sales. Steve Contois, the firms vice president, proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increases the average sales per salesperson. a. Develop the appropriate null and alternative hypotheses. b. What is the Type I error in this situation? What are the consequences of making this error? c. What is the Type II error in this situation? What are the consequences of making this error?Nico Parts, Inc., produces electronic products with short life cycles (of less than two years). Development has to be rapid, and the profitability of the products is tied strongly to the ability to find designs that will keep production and logistics costs low. Recently, management has also decided that post-purchase costs are important in design decisions. Last month, a proposal for a new product was presented to management. The total market was projected at 200,000 units (for the two-year period). The proposed selling price was 130 per unit. At this price, market share was expected to be 25 percent. The manufacturing and logistics costs were estimated to be 120 per unit. Upon reviewing the projected figures, Brian Metcalf, president of Nico, called in his chief design engineer, Mark Williams, and his marketing manager, Cathy McCourt. The following conversation was recorded: BRIAN: Mark, as you know, we agreed that a profit of 15 per unit is needed for this new product. Also, as I look at the projected market share, 25 percent isnt acceptable. Total profits need to be increased. Cathy, what suggestions do you have? CATHY: Simple. Decrease the selling price to 125 and we expand our market share to 35 percent. To increase total profits, however, we need some cost reductions as well. BRIAN: Youre right. However, keep in mind that I do not want to earn a profit that is less than 15 per unit. MARK: Does that 15 per unit factor in preproduction costs? You know we have already spent 100,000 on developing this product. To lower costs will require more expenditure on development. BRIAN: Good point. No, the projected cost of 120 does not include the 100,000 we have already spent. I do want a design that will provide a 15-per-unit profit, including consideration of preproduction costs. CATHY: I might mention that post-purchase costs are important as well. The current design will impose about 10 per unit for using, maintaining, and disposing our product. Thats about the same as our competitors. If we can reduce that cost to about 5 per unit by designing a better product, we could probably capture about 50 percent of the market. I have just completed a marketing survey at Marks request and have found out that the current design has two features not valued by potential customers. These two features have a projected cost of 6 per unit. However, the price consumers are willing to pay for the product is the same with or without the features. Required: 1. Calculate the target cost associated with the initial 25 percent market share. Does the initial design meet this target? Now calculate the total life-cycle profit that the current (initial) design offers (including preproduction costs). 2. Assume that the two features that are apparently not valued by consumers will be eliminated. Also assume that the selling price is lowered to 125. a. Calculate the target cost for the 125 price and 35 percent market share. b. How much more cost reduction is needed? c. What are the total life-cycle profits now projected for the new product? d. Describe the three general approaches that Nico can take to reduce the projected cost to this new target. Of the three approaches, which is likely to produce the most reduction? 3. Suppose that the Engineering Department has two new designs: Design A and Design B. Both designs eliminate the two nonvalued features. Both designs also reduce production and logistics costs by an additional 8 per unit. Design A, however, leaves post-purchase costs at 10 per unit, while Design B reduces post-purchase costs to 4 per unit. Developing and testing Design A costs an additional 150,000, while Design B costs an additional 300,000. Assuming a price of 125, calculate the total life-cycle profits under each design. Which would you choose? Explain. What if the design you chose cost an additional 500,000 instead of 150,000 or 300,000? Would this have changed your decision? 4. Refer to Requirement 3. For every extra dollar spent on preproduction activities, how much benefit was generated? What does this say about the importance of knowing the linkages between preproduction activities and later activities?