Required: Compute the total cost per Throw Cover Compute the desired ROI per Throw Cover Compute the mark up percentage using total cost per Throw Cover Compute the target selling price of a Throw Cover
As the world reports on inflation, companies are taking steps to adjust their prices and manage their resources. Citizens are worried that prices will increase to a level that is difficult. Atten’tive Corporation is a private corporation formed since 2000 for the purpose of selling products to local and regional economies. The government has consulted with Atten’tive for assistance with providing cheaper product options.
As at January 2005, they switched to Activity Based Costing System and has been using it ever since. Due to the switch in costing methods, Atten’tive Company used multiple cost drivers, which has a direct cause/effect relationship in its applied overhead costs. This method allows for a better accounting of costs, which may invariably have transferred out and therefore reduce some
The Chief Operating Officer held a meeting with all Department Heads on their operational budgets and to present a cash flow position of the company among other schedules. All management personnel have to prepare reports and schedules, based on their department and operational functions. The objective is to determine operational deficiencies and how they can reduce cost to meet customers’ budget, while making a profit. An analysis of the reports will be circulated at the end of the month.
The following data was reported in an interim memo:
Atten’tive Corporation provided their expected annual manufacturing budget for 2022 - 120,000 Direct Labour Hours. Their payments budget projections show that for April $300,000, May $500,000 and June $200,000. Client Collections – April: $312,500, May: $371,000 and June: $890,000. The company has a desired
All questions are related to Atten’tive Company and their operational needs for their multiple products.
Question 1 Part A
One of Atten’tive Company’s products is luxury Throw Covers. They reached out to their research and development team for a new line for the Christmas season in 2022. The Finance Manager is in the process of setting a target price for the luxury Throw Covers. The marketing department did a survey and has projected high sales as soon as they launch.
The cost data relating to the luxury Throw Covers at a budgeted volume of 8,000 units is as follows:
Unit Cost Total Cost
Direct Materials $75
Direct Labour $225
Variable Manufacturing overhead cost $30
Variable selling and Administrative expenses $15
Fixed manufacturing overhead cost $700,000
Fixed selling and administrative expenses $300,000
Required:
- Compute the total cost per Throw Cover
- Compute the desired ROI per Throw Cover
- Compute the mark up percentage using total cost per Throw Cover
- Compute the target selling price of a Throw Cover
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