Raju is a price taker in a product market that is very competitive. The market price is now $80 per unit, and Raju desires a profit of 20% of the market price. What is the maximum cost that Raju's expenses may be using target costing?
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Raju is a price taker in a product market that is very competitive. The market price is now $80 per unit, and Raju desires a profit of 20% of the market price. What is the maximum cost that Raju's expenses may be using target costing?
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- Kylies Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $59. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 25 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesnt increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.Raju is a price-taker in a competitive product market. The current market price is $80 per unit, and Raju’s desired profit is 20% of market price. Using target costing, what is the highest Raju’s costs can be?As the owner of the small business, you are tasked to determine the right price for your product before you open your business. In your business, you have a fixed cost of ₱50 000, and the variable cost per unit is ₱100. Using the formula for the break-even point, you must analyze the number of units needed to produce to break-even. You must also observe what will happen to the break-even units as the price approaches zero or infinity.
- Jonathan was preparing a new product analysis for Brand X. On the basis of consumer research, he had already decided to sell the product at $10 retail. Retailers traditionally expected a 40% margin and wholesalers a 20% margin (N.B. Both are expressed as a % of the selling price). Brand X’s variable costs are $2 per unit, and total fixed costs are estimated to be $28,000. The forecasted volume at this price is 9,000 units. Will Johnny’s brand make a profit with this planned selling price?José Ruiz wants to start a company that makes snowboards. Competitors sell a similar snowboard for $240 each. José believes he can produce a snow board for a total cost of $200 per unit, and he plans a 25% markup on his total cost. Compute José’s planned selling price. Can José compete with his planned selling price?José Ruiz wants to start a company that makes snowboards. Competitors sell a similar snowboard for $240 each. José believes he can produce a snowboard for a total cost of $200 per unit, and he plans a 25% markup on his total cost. Compute José’s planned selling price. Can José compete with his planned selling price?
- You are the Sales Manager for your company and you are evaluating orders from two customers but can accept only one of the orders because of your company’s limited capacity. The first order is for 100 units of a product with a contribution margin ratio of 60% and a selling price of $1,000. The second order is for 500 units of a product with a contribution margin ratio of 20% and a selling price of $800. The incremental fixed costs are the same for both orders. Which order do you accept?Ally has promised Kat that she will get the same $3 per dozen commission regardless of what price the cookies sell for. This makes Ally’s new costs look like this: Initial investment: $450Fixed costs: $375Variable costs: $3 (per dozen)Commission; $3 (per dozen) Ally is curious about what price she needs to charge to get a 60% Return on Investment (ROI) including her variable costs, initial investment and fixed costs. What price will she need to charge for a 60% ROI? For this calculation Ally is assuming sales of 900 dozen (900 units). Pay close attention to the investment and unit cost figures. This was covered in Module 6 and the formula is: FORMULA: ROI PRICE = UNIT COST + (ROI x INVESTMENT) / UNIT SALES HINT: Make sure you include all of Ally’s expenses in the right category Question 19 options: 1) 3.42 2) 3.72 3) 3.90 4) 4.21Mary Williams, owner of Williams Products, is evaluatingwhether to introduce a new product line. After thinkingthrough the production process and the costs of raw materi-als and new equipment, Williams estimates the variable costsof each unit produced and sold at $6 and the fixed costs peryear at $60,000.a. If the selling price is set at $18 each, how many unitsmust be produced and sold for Williams to break even?Use both graphic and algebraic approaches to get youranswer.b. Williams forecasts sales of 10,000 units for the first year ifthe selling price is set at $14 each. What would be the totalcontribution to profits from this new product during thefirst year?c. If the selling price is set at $12.50, Williams forecasts thatfirst-year sales would increase to 15,000 units. Which pric-ing strategy ($14.00 or $12.50) would result in the greatertotal contribution to profits?d. What other considerations would be crucial to the finaldecision about making and marketing the new product?
- The manager of Arbor, Incorporated, is considering raising its current price of $50 per unit by 10%. If she does so, she estimates that demand will decrease by 30,000 units per month. Arbor currently sells 100,000 units per month, each of which costs $35 in variable costs. Fixed costs are $1,200,000. Required: What is the current profit? What is the current break-even point in units? If the manager raises the price, what will profit be? If the manager raises the price, what will be the new break-even point in units? Assume the manager does not know how much demand will drop if the price increases. By how much would demand have to drop before the manager would not want to implement the price increase?McKenzie Company can sell 20,000 pounds of product for $10 per pound. The company can also process this product further and sell it for $17 per pound at a cost of $110,000. Should McKenzie sell product now or process it further and then sell it? What is the effect of the action? Group of answer choices Sell now, the company will be better off by $90,000. Process further, the company will be better off by $30,000. Sell now, the company will be better off by $140,000. Process further, the company will be better off by $140,000. Sell now, the company will be better off by $30,000.Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $35 per pound and costs $26 per pound to produce. Product C would sell for $59 per pound and would require an additional cost of $22 per pound to produce. What is the differential cost of producing Product C?