please answer the following question thanks Calculate target cost using cost-plus pricing.E9.18 (LO 1, 2) Mucky Duck makes swimsuits and sells them directly to retailers. Although MuckyDuck has a variety of suits, it does not make the all-body suit used by highly skilled swimmers. Themarket research department believes that a strong market exists for this type of suit. It says the all-body suit would sell for approximately $110. Given its experience, Mucky Duck believes the all-bodysuit would have the following manufacturing costs:$2530Manufacturing overhead 45Total costs$100Direct materialsDirect labourInstructionsa. Assume that Mucky Duck uses cost-plus pricing, and sets the price 25% above the product's costs.1. What would be the price charged for the all-body swimsuit?2. Under what circumstances might Mucky Duck consider manufacturing the all-body swimsuitgiven this approach?3. What is the highest acceptable manufacturing cost Mucky Duck would be willing to incur toproduce the all-body swimsuit?b. Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would chargeretailers for the all-body swimsuit?

Introduction:- Cost plus pricing is the easiest method of determination of selling price of your…

Total costs $100 Instructions a. Assume that Mucky Duck uses cost-plus pricing, and sets the price 25% above the product's 1. What would be the price charged for the all-body swimsuit? 2. Under what circumstances might Mucky Duck consider manufacturing the all-body swi given this approach? 3. What is the highest acceptable manufacturing cost Mucky Duck would be willing to inc produce the all-body swimsuit? b. Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would cha retailers for the all-body swimsuit?

Total costs $100 Instructions a. Assume that Mucky Duck uses cost-plus pricing, and sets the price 25% above the product's 1. What would be the price charged for the all-body swimsuit? 2. Under what circumstances might Mucky Duck consider manufacturing the all-body swi given this approach? 3. What is the highest acceptable manufacturing cost Mucky Duck would be willing to inc produce the all-body swimsuit? b. Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would cha retailers for the all-body swimsuit?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 41P: Salem Electronics currently produces two products: a programmable calculator and a tape recorder. A...

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Salem Electronics currently produces two products: a programmable calculator and a tape recorder. A recent marketing study indicated that consumers would react favorably to a radio with the Salem brand name. Owner Kenneth Booth was interested in the possibility. Before any commitment was made, however, Kenneth wanted to know what the incremental fixed costs would be and how many radios must be sold to cover these costs. In response, Betty Johnson, the marketing manager, gathered data for the current products to help in projecting overhead costs for the new product. The overhead costs based on 30,000 direct labor hours follow. (The high-low method using direct labor hours as the independent variable was used to determine the fixed and variable costs.) All depreciation. The following activity data were also gathered: Betty was told that a plantwide overhead rate was used to assign overhead costs based on direct labor hours. She was also informed by engineering that if 20,000 radios were produced and sold (her projection based on her marketing study), they would have the same activity data as the recorders (use the same direct labor hours, machine hours, setups, and so on). Engineering also provided the following additional estimates for the proposed product line: Upon receiving these estimates, Betty did some quick calculations and became quite excited. With a selling price of 26 and just 18,000 of additional fixed costs, only 4,500 units had to be sold to break even. Since Betty was confident that 20,000 units could be sold, she was prepared to strongly recommend the new product line. Required: 1. Reproduce Bettys break-even calculation using conventional cost assignments. How much additional profit would be expected under this scenario, assuming that 20,000 radios are sold? 2. Use an activity-based costing approach, and calculate the break-even point and the incremental profit that would be earned on sales of 20,000 units. 3. Explain why the CVP analysis done in Requirement 2 is more accurate than the analysis done in Requirement 1. What recommendation would you make?
A company is providing its product to the consumer through the wholesalers. The managing director of the company thinks that if the company starts selling through retailers or to the consumers directly, it can increase its sales, charge higher prices and make more profit. On the basis of the following information and consider variable cost is rial 2.50 per unit and fixed cost is rial 50000. (a) Advise the managing director whether the company should change its channel of distribution or not (with calculation and Justification). (b) Provide suggestions and recommendations on the basis of analysis.
A clothing company has determined that if the price of a T-shirt is K40, then 150 will be demanded by T-shirt wearers. When the price is K45, then 100 T-shirts are demanded by T- shirts wearers.(a) Find the price-demand equation, assuming that it is linear.(b) Find the revenue function.(c) Find the number of items sold that will give the maximum revenue. What is the maximum revenue?(d) What is the price of each item when maximum revenue is achieved?
Suppose you are the purchasing manager for a company that manufactures scanners and other computer peripherals. Your vendor for scanner motors is now offering "quantity discounts" in the form of instant rebates and lower shipping charges as follows. Quantity Net Price Rebate Shipping 1–500 motors $16 none $1.50 501–1,000 motors 16 $1.30 1.10 1,001–2,000 motors 16 1.90 0.80 (a) Calculate the cost of the motors, including shipping charges, for each category (in $). 1–500 motors$ 501–1,000 motors$ 1,001–2,000 motors$ (b) If you usually purchase 400 motors per month, what percent would be saved per motor by ordering 800 every two months? Round to the nearest tenth of a percent. % (c) What percent would be saved per motor by ordering 1,200 every three months? Round to the nearest tenth of a percent. % (d) How much money (in $) can be saved in a year by purchasing the motors every three months instead of every month? $ (e) What other factors besides price…
Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" video player for a price of $430. It costs ECC $300 to make the player. ECC's main competitor is coming to market with a new video player that will sell for a price of $400. ECC feels that it must reduce its price to $400 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 19%. ECC currently sells 218,000 video players per year.What is the target cost if target profit is 25% of sales and ECC must meet the competitive price of $400?
Ledfords is a chain of home improvement stores. Suppose Ledfords is trying to decide whether to produce its own line of Formica countertops, cabinets, and picnic tables. Assume Ledford would incur the following unit costs in producing its own product lines: Rather than making these products, assume that Ledfords could buy them from outside suppliers. Suppliers would charge Ledfords $40 per countertop, $25 per cabinet, and $65 per picnic table. Whether Ledfords makes or buys these products, assume that the company expects the following annual sales: • Countertops—487,200 at $130 each • Cabinets—150,000 at $75 each • Picnic tables—100,000 at $225 each Assume that Ledfords has a production facility with excess capacity that could be used to produce these products with no additional fixed costs. If making is sufficiently more profitable than outsourcing, Ledfords will start production of the new line of products. The president of Ledfords has asked your consulting group for a…
Ingrid is planning to expand her business by taking on a new product that costs $7.56. In order to market this new product, $1307.00 must be spent on advertising. The suggested retail price for the product is $11.31. (a) If a price of $14.49 is chosen, how many units does she need to sell to break even? (b) If advertising is increased to $1674.00, and the price is kept at $11.31, how many units does she need to sell to break even?
Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The tops would sell for $47 each with expected sales of 3,500 tops annually. By adding the fleece tops, management feels the firm will sell an additional 205 pairs of jeans at $57 a pair and 340 fewer T-shirts at $18 each. The variable cost per unit is $25 on the jeans, $9 on the T-shirts, and $21 on the fleece tops. With the new item, the depreciation expense is $27,000 a year and the fixed costs are $62,000 annually. The tax rate is 21 percent. What is the project's operating cash flow? Multiple Choice $25,815 $12,495 $36,180 $20,980 $31,345
Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The tops would sell for $55 each with expected sales of 3,900 tops annually. By adding the fleece tops, management feels the firm will sell an additional 245 pairs of jeans at $65 a pair and 380 fewer T-shirts at $26 each. The variable cost per unit is $33 on the jeans, $17 on the T-shirts, and $29 on the fleece tops. With the new item, the depreciation expense is $35,000 a year and the fixed costs are $70,000 annually. The tax rate is 21 percent. What is the project's operating cash flow? $28,328 $26,084 $39,596 $30,188 $35,648 Please answer fast i give you upvote.
Sparkle, Inc., sells customized accessories. Currently, it sells 10, 000 sparkly phone cases annually at an average price of $55 a case. It is considering adding a lower -priced (less sparkly) line of phone cases, which sell for $29 a pair. Sparkle, Inc., estimates it can sell 5,000 of the lower-priced cases but will sell 1,000 less of the higher-priced cases by doing so. What is the dollar amount of sales that should be used when evaluating the addition of the lower-priced phone cases?
A business that will open a gift shop in Los Angeles is considering making and selling love-themed magnets. It is thought that it will not be possible to order new magnets during the fair period, and magnets that are not sold during the fair period will not be sold later. A box of magnets costs the business $100 and generates $460 from its sale. The table includes predictions about demand probabilities.a-) What is the overstocking cost of the business in dollars/box?
Diamond Boot Factory normally sells its specialty boots for $30 a pair. An offer to buy 100 boots for $22 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $12, and special stitching will add another $1 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization.$ Income Should Diamond Boot Factory accept or reject the special offer?