Management at Kirkland Machine Tool Co. is considering the development of a new automated drill press called the Auto Drill. After conferring with the design engineers., the controller's staff assembled the following data about this project. Target selling price $ 7,500.00 per unit Desired profit percentage 25% of total unit cost Projected unit demand 4500 units Activity-based cost rates Materials handling activity 5% of raw materials and purchased parts cost Engineering activity $300 per unit for Auto Drill Production and assembly activity $50 per machine hour Delivery activity $570 per unit for Auto Drill Marketing activity $400 per unit for Auto Drill Per unit data Raw Materials cost $ 1,620.00 Purchased parts cost $ 840.00 Manufacturing labor hours 6 hours Hourly rate $ 14.00 Assembly labor hours 10 hours Hourly labor rate $ 15.00 Machine hours 30 hours A) Compute the product's Target cost.
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1) Management at Kirkland Machine Tool Co. is considering the development of a new automated |
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drill press called the Auto Drill. After conferring with the design engineers., the controller's staff |
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assembled the following data about this project. |
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Target selling price |
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$ 7,500.00 |
per unit |
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Desired profit percentage |
25% of total unit cost |
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Projected unit demand |
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4500 units |
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Activity-based cost rates |
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Materials handling activity |
5% of raw materials and purchased parts cost |
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Engineering activity |
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$300 per unit for Auto Drill |
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Production and assembly activity |
$50 per machine hour |
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Delivery activity |
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$570 per unit for Auto Drill |
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Marketing activity |
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$400 per unit for Auto Drill |
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Per unit data |
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Raw Materials cost |
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$ 1,620.00 |
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Purchased parts cost |
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$ 840.00 |
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Manufacturing labor hours |
6 hours |
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Hourly rate |
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$ 14.00 |
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Assembly labor hours |
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10 hours |
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Hourly labor rate |
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$ 15.00 |
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Machine hours |
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30 hours |
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A) Compute the product's Target cost. |
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