Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product: Year Expected Volume (Units) Expected Price per Unit 1 41,280 $19 2 48,000 20 3 90,000 16 4 34,400 12 The firm wants to net a minimum of $3.50 per unit in profit over the product’s life, and selling and administrative expenses are expected to average $43,000 per year. Calculate the life cycle target cost pe
Q: In March 2015, the Marketing Division of the L.P. Manning Corporation performed a national survey to…
A: Profits after tax = Sales - direct expenses - indirect expenses - taxes paid
Q: Using sensitivity analysis The Circle Clock Company sells a particular clock for $25. The variable…
A:
Q: (d) Guido is a manufacturing firm producing several products for the local market. The following…
A: Contribution margin refers to the contribution a product made to the profit. It can be gross or per…
Q: Minden Company introduced a new product last year for which it is trying to find an optimal selling…
A: Given: Every $2 reduction in selling price = Increase in Sales units by 5000units Present Selling…
Q: Vinic Films has developed a new film that will increase the shelf-lives of frozen foods. Between…
A: Annual Worth is a financial analysis tool that shows either effective annuity cost which will be…
Q: The following operating information reports the results of Blue Spruce Company’s production and sale…
A: Sale units = 1500 ( offered to Purchase) Selling price per unit = $100 Sales Revenue = Sale units x…
Q: . Fong Company introduced a new product last year for which it is trying to find an optimal selling…
A: We will take the units to be increased by 5000 units and we will reduce the selling price by $2 for…
Q: Minden Company introduced a new product last year for which it is trying to find an optimal selling…
A: As posted multiple sub parts we are answering only first three sub parts kindly repost the…
Q: Cabin Creek Company is considering adding of a new line of kitchen cabinets. The company's…
A: Introduction:- Contribution margin is the difference between sales revenue and variable costs…
Q: Derby Phones is considering the introduction of a new model of headphones with the following price…
A: Break even point (BEP): Breakeven is the point where total expenses are equal to total revenue. at…
Q: Thornbrough Corporation produces and sells a single product with the following characteristics:…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Relling Corporation manufactures a drink bottle, model CL24. During 2017, Relling produced 210,000…
A:
Q: Roland Company operates a small factory in which it manufactures two products: A and B. Production…
A: An income statement is a financial statement that represents the financial performance of the…
Q: Minden Company introduced a new product last year for which it is trying to find an optimal selling…
A: Compute present year's net operating income or loss:
Q: Samsung Electronics is trying to reduce supply chain risk by making more responsible make/buy…
A: Breakeven Sales Units It means the quantity of finished goods which are required to be sold for…
Q: a. Compute the CM ratio and breakeven points in dollars. b. Compute the operating leverage at last…
A: ANSWER: First let us metion the given values in question relating to product A of last year: Sales…
Q: Campbell Company, which produces and sells a small digital clock, bases its pricing strategy on a 20…
A: Differential analysis or incremental analysis is an accounting technique used by management. In…
Q: You are pitching a marketing proposal to a company that sells electronic equipment. For a particular…
A: After deducting operational direct and indirect expenses from sales revenue, operating income is the…
Q: Jaime Ltd manufactures and sells a small electric product to order for the computer industry. The…
A: An income statement is a financial report that indicates the revenue and expenses of a business. It…
Q: Derby Phones is considering the introduction of a new model of headphones with the following price…
A: (a) Operating profit = Sales - variable cost - fixed cost = (7,000 x 18) - (7,000 x 7) -…
Q: Davao Company is considering the introduction of a new product. As one dep in its study of the new…
A: Total costs of the business includes fixed costs and variable costs of the business. Markup is the…
Q: company is producing a high-volume item that sells for PhP 0.75 per unit. The variable production…
A: Solution: Part a) Annual savings from the purchase of the new machine will be given as follows: The…
Q: Derby Phones is considering the introduction of a new model of headphones with the following price…
A: Operating profit refers to the income of the company that is earned by the main operations of the…
Q: Jaime Ltd manufactures and sells a small electric product to order for the computer industry. The…
A: No. of units produced = No. of units sold + Increase in ending units = 108000 + 18000 = 126,000…
Q: Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is…
A: Formula: Target cost = Estimated market price - Gross margin. Deduction of Gross margin from…
Q: Suppose PLF actually produces 300,000 bulbs. Calculate the production-volume variance using each…
A:
Q: Jaime Ltd manufactures and sells a small electric product to order for the computer industry. The…
A: The income statement should be prepared to record revenue and expenses for the period and find the…
Q: Newton Company currently produces and sells 6,000 units of a product that has a contribution margin…
A: In the given question, first desired contribution margin per unit to earn target income will be…
Q: Newman Company currently produces and sells 7,000 units of a product that has a contribution margin…
A: Target Profit: It refers to the desired amount of profit that a company expects to achieve by the…
Q: For the coming year, Cleves Company anticipates a unit selling price of $100, a unit variable cost…
A: 1. Calculate the anticipated break-even sales in units.
Q: Larson, Inc., manufactures backpacks. Last year, it sold 85,000 of its basic model for $25 per unit.…
A: Total market sales = Larson sales / marker share = 85000/20% = 425,000 units
Q: If Ayayai accepts this order, by how much will its income increase or decrease?
A: We Know that fixed cost remains constant irrespective of the level of activity and variable cost…
Q: A Swiss Interior Company produces and sells lamps that are sold usually all year round. The company…
A: The new selling price can be calculated by dividing the desired sales level by the decreased units…
Q: SOWSEY Company is considering the addition of a new product to its current product lines. The…
A: Solution: Lowest selling price per unit could be charged to product and still make additional P2 per…
Q: The Lolitasut Company has designed a new product X301 for aerospace industry. Based on internal…
A: Target costing is a method of determining cost of a product based on the margin required on it. This…
Q: ABC has developed a new kitchen utensil. The firm has conducted significant market research and…
A: >Target cost is the cost of the product that has been determined by analysing the difference…
Q: Nytre Limited sells executive office chairs for a price of $195 each. The contribution margin ratio…
A: Price of Chair = $195 Contribution Margin Ratio = 60% Fixed cost = $80,000 Target profit = $85,000…
Q: A company is planning a new product. Market research information suggests that the product should…
A: Given : Units to be sold 20000 units profit margin expected 20% of sales Research and development…
Q: Chile's, Inc. currently produces and sells 4,000 units of a product that has a contribution margin…
A: Break even point means a point where firm is neither earning profit nor incurring any loss. For…
Q: An electronics firm is currently manufacturing anitem that has a va riable cost of $.50 per unit and…
A: We first need to determine the profit in the two cases by considering the revenue and the total…
Q: 108,000 units next year. J
A: Given: Selling price 654.00 Direct materials 216.00 Direct labour 108.00 Production overhead 54.00…
Q: Disk City, Inc. is a retailer for digital video disks. The projected net income for the current year…
A: Calculate the contribution margin: Particulars Amount ($) Selling price 19 Less:…
Q: raceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000…
A: Net profit refers to the total sum value of money earned by an entity after deducting all the…
Q: Derby Phones is considering the introduction of a new model of headphones with the following price…
A: Sales (7,000×22) $154,000 Less: Variable costs (7,000×5) 35,000 Contribution margin $119,000…
Q: The Sonia Company has two product lines, high-speed printers and electronic typewriters. The…
A: Sales budget is considered as the initial phase of the budgeting process. The measure of income…
Q: Jaime Ltd manufactures and sells a small electric product to order for the computer industry. The…
A: An income statement is a financial report that indicates the revenue and expenses of a business. It…
Q: Chile's, Inc. currently produces and sells 4,000 units of a product that has a contribution margin…
A: Contribution margin per unit at Target Profit :-…
Utah Utensil has developed a new kitchen utensil. The firm has conducted significant
| Year | Expected Volume (Units) | Expected Price per Unit |
|---|---|---|
| 1 | 41,280 | $19 |
| 2 | 48,000 | 20 |
| 3 | 90,000 | 16 |
| 4 | 34,400 | 12 |
The firm wants to net a minimum of $3.50 per unit in profit over the product’s life, and selling and administrative expenses are expected to average $43,000 per year. Calculate the life cycle target cost per unit to produce the new utensil. Note: Round your answer to two decimal places (i.e., round 2.4555 to 2.46). $
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- Nico Parts, Inc., produces electronic products with short life cycles (of less than two years). Development has to be rapid, and the profitability of the products is tied strongly to the ability to find designs that will keep production and logistics costs low. Recently, management has also decided that post-purchase costs are important in design decisions. Last month, a proposal for a new product was presented to management. The total market was projected at 200,000 units (for the two-year period). The proposed selling price was 130 per unit. At this price, market share was expected to be 25 percent. The manufacturing and logistics costs were estimated to be 120 per unit. Upon reviewing the projected figures, Brian Metcalf, president of Nico, called in his chief design engineer, Mark Williams, and his marketing manager, Cathy McCourt. The following conversation was recorded: BRIAN: Mark, as you know, we agreed that a profit of 15 per unit is needed for this new product. Also, as I look at the projected market share, 25 percent isnt acceptable. Total profits need to be increased. Cathy, what suggestions do you have? CATHY: Simple. Decrease the selling price to 125 and we expand our market share to 35 percent. To increase total profits, however, we need some cost reductions as well. BRIAN: Youre right. However, keep in mind that I do not want to earn a profit that is less than 15 per unit. MARK: Does that 15 per unit factor in preproduction costs? You know we have already spent 100,000 on developing this product. To lower costs will require more expenditure on development. BRIAN: Good point. No, the projected cost of 120 does not include the 100,000 we have already spent. I do want a design that will provide a 15-per-unit profit, including consideration of preproduction costs. CATHY: I might mention that post-purchase costs are important as well. The current design will impose about 10 per unit for using, maintaining, and disposing our product. Thats about the same as our competitors. If we can reduce that cost to about 5 per unit by designing a better product, we could probably capture about 50 percent of the market. I have just completed a marketing survey at Marks request and have found out that the current design has two features not valued by potential customers. These two features have a projected cost of 6 per unit. However, the price consumers are willing to pay for the product is the same with or without the features. Required: 1. Calculate the target cost associated with the initial 25 percent market share. Does the initial design meet this target? Now calculate the total life-cycle profit that the current (initial) design offers (including preproduction costs). 2. Assume that the two features that are apparently not valued by consumers will be eliminated. Also assume that the selling price is lowered to 125. a. Calculate the target cost for the 125 price and 35 percent market share. b. How much more cost reduction is needed? c. What are the total life-cycle profits now projected for the new product? d. Describe the three general approaches that Nico can take to reduce the projected cost to this new target. Of the three approaches, which is likely to produce the most reduction? 3. Suppose that the Engineering Department has two new designs: Design A and Design B. Both designs eliminate the two nonvalued features. Both designs also reduce production and logistics costs by an additional 8 per unit. Design A, however, leaves post-purchase costs at 10 per unit, while Design B reduces post-purchase costs to 4 per unit. Developing and testing Design A costs an additional 150,000, while Design B costs an additional 300,000. Assuming a price of 125, calculate the total life-cycle profits under each design. Which would you choose? Explain. What if the design you chose cost an additional 500,000 instead of 150,000 or 300,000? Would this have changed your decision? 4. Refer to Requirement 3. For every extra dollar spent on preproduction activities, how much benefit was generated? What does this say about the importance of knowing the linkages between preproduction activities and later activities?Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
- ABC has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sale of new product YEAR EXPECTED VOLUME EXPECTED PRICE PER UNIT 1 48,000 19 2 48,000 20 3 90,000 16 4 40,000 12 The firm wants a net minimum of 3.5 profit per unit over the product life. Fixed average expenses related to the new product is expected to be 50,000 annually. Calculate the target cost per unit.After conducting a market research study, Magnificent Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $270. The annual target sales volume for interior doors is 29,000. Magnificent has target operating income of 40% of sales. What are target sales revenues? A. $4,698,000 B. $3,132,000 C. $10,962,000 D. $7,830,000Titan Metalworks produces a special kind of metal ingots that are unique, which allows Titan to follow a cost-plus pricing strategy. Titan has $10,000,000 of assets and shareholders expect approximately a 7% return on assets. Assume all products produced are sold. Additional data are as follows: units per year per unit per year Using the cost-plus pricing approach, what should be the sales price per unit? (Round your answer to the nearest cent.) Sales volume Variable costs Fixed costs 400,000 $16 $1,500,000 A. $16.00 OB. $21.50 OC. $1.75 OD. $19.75 (...)
- A company is planning a new product. Market research information suggests that the product should sell 20,000 units at $35.00/unit. The company seeks to make a margin of 20% on sales. It is estimated that the lifetime costs of the product will be as follows: a. Research and development costs $60,000 b. Manufacturing costs $25/unit c. Decommissioning Costs $40,000 What is the Target Cost per unit? What is the original lifecycle cost per unit?An industry is going to launch a new product in the market in the year 2018. The data pertaining to the costs and the estimated sales is provided as follows 1. Fixed cost for the year 2018-2019 is 20000$. 2. The variable cost per unit is 12$. 3. The estimated sales are 800000$. 4. If each unit is sold at 30$. Find out 1. Break-even point. 2. The profit at a turn-over of 25000 units. 3. Margin of safety in terms of units and sales. 4. If a profit target is 1200000$, compute the turn over required. 5. Also construct the break-even chart and show the details on it.Answer the following short problems: 1. Wergas, Inc. has determined the following for a given year: Economic order quantity Total cost to place purchase orders for the year Cost to place one purchase order Cost to carry one unit for 1 year What is Wergas' estimated annual usage in units? 5,000 units P 10,000 P 50 P4 2. Alilio Company is planning to build a new plant in Batangas City. The plant is expected to provide additional sales as follows: First Year Second Year Third Year P 2.0 million P2.5 million P 3.0 million (maximum capacity) The financial manager of Alilio estimates that for every peso of sales, P0.25 must be invested in current as sets. If all discounts are taken and bills are paid on time, accounts payable average P 0.04 per peso of sales. Other current liabilities, such as wages payable, typically average P0.05 per peso of sales. Required: a. Estimate the working capital investments required for the new plant in the l", 2nd & 3rd year of operations. b. How do these…
- ABC Company manufactures the product XE-17. The product is sold at a unit price of $70.Variable expenses are $13.50 per unit and fixed expenses are $220,000 per year.Required :a. What should be the product’s CM ratio? b. Calculate the BEP is sales dollars and in units for ABC Company. c. The manager of ABC company estimates that in the coming year, the company’s sales willincrease by $80,000 (from the current sales). How much should the net profit / loss increase/decrease if the fixed costs remain constant? d. The manager of ABC company predicts that by spending an additional $80,000 per year onadvertising and using higher quality raw material (which will in turn increase the raw materialcost per unit by $3), and increasing selling price per unit by 2% (to compensate for theincreased costs), unit sales will increase by two- thirds of the current sales units. Should thecompany go with the manager’s proposed plan? Explain your answer. (Assume that in thecurrent year, the company sold…ABC Company manufactures the product XE-17. The product is sold at a unit price of $70.Variable expenses are $13.50 per unit and fixed expenses are $220,000 per year.Required :a. What should be the product’s CM ratio? b. Calculate the BEP is sales dollars and in units for ABC Company. c. The manager of ABC company estimates that in the coming year, the company’s sales willincrease by $80,000 (from the current sales). How much should the net profit / loss increase/decrease if the fixed costs remain constant? d. The manager of ABC company predicts that by spending an additional $80,000 per year onadvertising and using higher quality raw material (which will in turn increase the raw materialcost per unit by $3), and increasing selling price per unit by 2% (to compensate for theincreased costs), unit sales will increase by two- thirds of the current sales units. Should thecompany go with the manager’s proposed plan? Explain your answer. (Assume that in thecurrent year, the company sold…The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company's products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data: Demand Next Selling Price year (units) per Unit $16.70 $ 7.50 $26.60 50,000 42,000 35,000 40,000 $ 14.00 325,000 $ 9.60 The following additional information is available: Product Debbie Trish Sarah Mike Sewing kit a. The company's plant has a capacity of 130,000 direct labor-hours per year on a single-shift basis. The company's present employees and equipment can produce all five products. b. The direct labor rate of $16 per hour is expected to remain unchanged during the coming year. c. Fixed manufacturing costs total $520,000 per year. Variable overhead costs are $2 per direct labor-hour. d. All of the company's nonmanufacturing costs are fixed. e. The company's finished goods inventory is negligible and…
