HORNGREN'S COST ACCT >IA<
16th Edition
ISBN: 9780136675464
Author: Datar
Publisher: PEARSON
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Chapter 13, Problem 13.19E
Target prices, target costs, activity-based costing. Snappy Tiles is a small distributor of marble tiles. Snappy identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2016:
For 2016, Snappy buys 250,000 marble tiles at an average cost of $3 per tile and sells them to retailers at an average price of $4 per tile. Assume Snappy has no fixed costs and no inventories.
- 1. Calculate Snappy’s operating income for 2016.
Required
- 2. For 2017, retailers are demanding a 5% discount off the 2016 price. Snappy’s suppliers are only willing to give a 4% discount. Snappy expects to sell the same quantity of marble tiles in 2017 as in 2016. If all other costs and cost-driver information remain the same, calculate Snappy’s operating income for 2017.
- 3. Suppose further that Snappy decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Snappy expects to reduce the number of orders to 200 and the cost per order to $25 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Snappy expects to reduce the number of loads moved to 3,125 and the cost per load moved to $28. Will Snappy achieve its target operating income of $0.30 per tile in 2017? Show your calculations.
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Number of orders
900
$80 per order
2.
Receiving and storage
Loads moved
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$50 per load
3.
Shipping of marble tiles to retailers
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$40 per shipment
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20192019,
BiskBisk
buys
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marble tiles at an average cost of
$ 2$2
per tile and sells them to retailers at an average price of
$ 7$7
per tile. Assume
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Sirhuds Inc., a maker of smartwatches, reports the information below on its product. The company uses absorption costing and has a target markup of 40% of absorption cost per unit.
Direct materials cost
$
128
per unit
Direct labor cost
$
58
per unit
Variable overhead cost
$
36
per unit
Fixed overhead cost
$
231,000
per year
Variable selling and administrative expenses
$
17
per unit
Fixed selling and administrative expenses
$
190,000
per year
Expected production (and sales)
22,000
units per year
Compute the target selling price per unit under absorption costing. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Brindle Arts uses Variable Costing for internal purposes, but uses Absorption Costing for their financial reports. The following information is for Quarter 4, 2021 and Quarter 1, 2022.
Calculate unit product costs for Quarters 4 and 1 for Variable and Absorption Costing. Prepare an income statement for each method, then show why there is a difference between the two.
Selling price per unit
$ 150
Quarter 4
Quarter 1
Variable costs per unit
Units in beginning inventory
-
1,750
Direct materials
$ 45.00
Production (in units)
15,000
10,750
Direct labor
$ 20.00
Sales (in units)
13,250
12,500
Variable overhead
$ 15.00
Ending inventory
1,750
-
Variable S&A
$ 10.00
Fixed Costs in total per quarter
Fixed manufacturing overhead…
Chapter 13 Solutions
HORNGREN'S COST ACCT >IA<
Ch. 13 - What are the three major influences on pricing...Ch. 13 - Relevant costs for pricing decisions are full...Ch. 13 - Describe four purposes of cost allocation.Ch. 13 - How is activity-based costing useful for pricing...Ch. 13 - Describe two alternative approaches to long-run...Ch. 13 - What is a target cost per unit?Ch. 13 - Describe value engineering and its role in target...Ch. 13 - Give two examples of a value-added cost and two...Ch. 13 - It is not important for a company to distinguish...Ch. 13 - Prob. 13.10Q
Ch. 13 - Describe three alternative cost-plus pricing...Ch. 13 - Give two examples in which the difference in the...Ch. 13 - What is life-cycle budgeting?Ch. 13 - What are three benefits of using a product...Ch. 13 - Prob. 13.15QCh. 13 - Which of the following statements regarding price...Ch. 13 - Value-added, non-value-added costs. The Magill...Ch. 13 - Target operating income, value-added costs,...Ch. 13 - Target prices, target costs, activity-based...Ch. 13 - Target costs, effect of product-design changes on...Ch. 13 - Target costs, effect of process-design changes on...Ch. 13 - Cost-plus target return on investment pricing....Ch. 13 - Cost-plus, target pricing, working backward....Ch. 13 - Life-cycle budgeting and costing. Arnold...Ch. 13 - Considerations other than cost in pricing...Ch. 13 - Cost-plus, target pricing, working backward. The...Ch. 13 - Value engineering, target pricing, and target...Ch. 13 - Target service costs, value engineering,...Ch. 13 - Cost-plus, target return on investment pricing....Ch. 13 - Cost-plus, time and materials, ethics. C S...Ch. 13 - Cost-plus and market-based pricing. Georgia Temps,...Ch. 13 - Cost-plus and market-based pricing. (CMA, adapted)...Ch. 13 - Life-cycle costing. Maximum Metal Recycling and...Ch. 13 - Airline pricing, considerations other than cost in...Ch. 13 - Prob. 13.35PCh. 13 - Ethics and pricing. Instyle Interior Designs has...Ch. 13 - Value engineering, target pricing, and locked-in...
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