Managerial Accounting: Tools For Business Decision Making, Seventh Edition Wileyplus Card
7th Edition
ISBN: 9781118680698
Author: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
Publisher: John Wiley & Sons Inc
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Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All-
Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit.
The department indicates that the All-Body suit would sell for approximately $100. Glven its experience, Leno believes the All-Body
suit would have the following manufacturing costs.
Direct materials
$29
Directlabor
27
Manufacturing overhead
44
Total costs
$100
Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All-
Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit.
The department indicates that the All-Body suit would sell for approximately $100. Given its experience, Leno believes the All-Body
suit would have the following manufacturing costs.
Direct materials
Direct labor
Manufacturing overhead
Total costs
(a1)
Selling price $
eTextbook and Media
$29
Save for Later
29
Assume that Leno uses cost-plus pricing, setting the selling price 26% above its costs. What would be the price charged for the All-
Body swimsuit?
42
$100
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Sarasota Company makes swimsuits and sells these suits directly to retailers. Although Sarasota has a variety of suits, it does not
make the Performance suit used by highly skilled swimmers. The market research department believes that a strong market exists
for this type of suit. The department indicates that the Performance suit would sell for approximately $100. Given its experience,
Sarasota believes the Performance suit would have the following manufacturing costs.
Direct materials
Direct labor
Manufacturing overhead
Total costs
(a1)
$29
Selling price
35
36
$100
Assume that Sarasota uses cost-plus pricing, setting the selling price 25% above its costs. What would be the price charged for
the Performance swimsuit?
Chapter 8 Solutions
Managerial Accounting: Tools For Business Decision Making, Seventh Edition Wileyplus Card
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- Sarasota Company makes swimsuits and sells these suits directly to retailers. Although Sarasota has a variety suits, it does not make the Performance suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the Performance suit would sell for approximately $100. Given its experience, Sarasota believes the Performance suit would have the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total costs (a1) (b) Your answer is correct. Selling price $ Assume that Sarasota uses cost-plus pricing, setting the selling price 25% above its costs. What would be the price charged for the Performance swimsuit? eTextbook and Media $29 35 36 Selling price $ $100 125 Attempts: 1 of 5 used Assume that Sarasota uses target costing. What is the price that Sarasota would charge the retailer for the Performance swimsuit?arrow_forwardEasy Access Medical Supplies makes semi-motorized walking sticks. They have decided to investigate whether they should continue to make or buy the walking sticks from a supplier.  Currently, the cost of producing 10,000 semi-motorized walking sticks is as follows:   Cost description Per Unit $ Direct Material 15 Direct Labor 10 Variable Factory Overhead 8 Fixed Factory Overhead 15  $48  The same component can be purchased from an outside supplier for $38 per unit. If the company purchases the semi-motorized walking sticks, 20% of the fixed costs will be eliminated.  Required: Using incremental analysis, determine if the component should be purchased from the outside supplier?      Would your decision in part a) change if the company has the opportunity to rent out its facilities that it currently uses to manufacture the component for $5,500 ? Show full computations. Why “Opportunity Costs” are not recorded in the financial books but…arrow_forwardEasy Access Medical Supplies makes semi-motorized walking sticks. They have decided to investigate whether they should continue to make or buy the walking sticks from a supplier.  Currently, the cost of producing 10,000 semi-motorized walking sticks is as follows:   Cost description Per Unit $ Direct Material 15 Direct Labor 10 Variable Factory Overhead 8 Fixed Factory Overhead 15  $48  The same component can be purchased from an outside supplier for $38 per unit. If the company purchases the semi-motorized walking sticks, 20% of the fixed costs will be eliminated.  Required: a) Using incremental analysis, determine if the component should be purchased from the outside supplier?​ b) Would your decision in part a) change if the company has the opportunity to rent out its facilities that it currently uses to manufacture the component for $5,500 ? Show full computations.​​​​ c) Why “Opportunity Costs” are not recorded…arrow_forward
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