Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,440 whereas the competition's comparable workbench sells for $1,300. Sam determined that a price drop to $1,300 would be necessary to protect its market share and maintain an annual sales level of 13,600 workbenches. Cost data based on sales of 13,600 workbenches: Budgeted Quantity Actual Quantity Actual Cost Direct materials (pounds) 178,000 171,000 $ 3,453,000 Direct labor (hours) 74,000 73,000 826,500 Machine setups (number of setups) 1,200 1,000 253,000 Mechanical assembly (machine hours) 29,400 282,750 3,756,000 The current cost per unit is (rounded to the nearest whole dollar): Multiple Choice $560. $495. $437. $609. $417.
Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,440 whereas the competition's comparable workbench sells for $1,300. Sam determined that a price drop to $1,300 would be necessary to protect its market share and maintain an annual sales level of 13,600 workbenches. Cost data based on sales of 13,600 workbenches: Budgeted Quantity Actual Quantity Actual Cost Direct materials (pounds) 178,000 171,000 $ 3,453,000 Direct labor (hours) 74,000 73,000 826,500 Machine setups (number of setups) 1,200 1,000 253,000 Mechanical assembly (machine hours) 29,400 282,750 3,756,000 The current cost per unit is (rounded to the nearest whole dollar): Multiple Choice $560. $495. $437. $609. $417.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter11: Strategic Cost Management
Section: Chapter Questions
Problem 27P: Maxwell Company produces a variety of kitchen appliances, including cooking ranges and dishwashers....
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Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,440 whereas the competition's comparable workbench sells for $1,300. Sam determined that a price drop to $1,300 would be necessary to protect its market share and maintain an annual sales level of 13,600 workbenches.
Cost data based on sales of 13,600 workbenches:
| Budgeted Quantity | Actual Quantity | Actual Cost | |
|---|---|---|---|
| Direct materials (pounds) | 178,000 | 171,000 | $ 3,453,000 |
| Direct labor (hours) | 74,000 | 73,000 | 826,500 |
| Machine setups (number of setups) | 1,200 | 1,000 | 253,000 |
| Mechanical assembly (machine hours) | 29,400 | 282,750 | 3,756,000 |
The current cost per unit is (rounded to the nearest whole dollar):
Multiple Choice
-
$560.
-
$495.
-
$437.
-
$609.
-
$417.
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