Syntech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,500 per month in fixed costs. Syntech sells 100 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $45 per unit of variable costs, plus an increase in fixed costs of $1,000 per month. The current price of the camera is $160. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings?
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- Syntech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,400 per month in fixed costs. Syntech sells 100 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $45 per unit of variable costs, plus an increase in fixed costs of $900 per month. The current price of the camera is $170. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings? Price to be charged Feedbackarrow_forwardSamsung Electronics is trying to reduce supply chain risk by making more responsible make/buy decisions through improved cost estimation. A high-use component (expected usage is 5000 units per year) can be purchased for $25 per unit with delivery promised within a week. Alternatively, Samsung can make the component inhouse and have it readily available at a cost of $5 per unit, if equipment costing $150,000 is purchased. Labor and other operating costs are estimated to be $35,000 per year over the study period of 5 years. Salvage is estimated at 10% of first cost and MARR is 12% per year. Neglect the element of availability (a) to determine the breakeven quantity, and (b) to recommend making or buying at the expected usage level. Solve manually please, no Excel <3arrow_forwardMesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its online website. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (b) When is target costing particularly helpful in deciding whether to produce a given product?arrow_forward
- A software provider buys blank Bluray DVDs at $550 per hundred and currently uses 2 million DVDs per year. The manager believes that it may be cheaper to make the DVDs rather than buy them. Direct production costs (labour, materials, fuel) are estimated at $2.50 per DVD. The equipment needed would cost $3 million. The equipment should last for 15 years, provided it is overhauled every 5 years at a cost of $250 000 each time. The operation will require additional current assets of S400 000. The company's required rate of return is 12 per cent. Evaluate the proposal using NPV formula and not excel.arrow_forwardMesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Mesa believes that it can charge $30 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $31. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (a) Compute the target cost for the Slim Slicer. Target cost $arrow_forwardViper Avionics makes aircraft instrumentation. Its basic navigation radio requires $ 60 in variable costs and $5,000 per month in fixed costs. Further processing the radio, to enhance its functionality, will require an additional $28 per unit of variable costs, plus an increase in fixed costs of $ 290 per month. The marketing manager believes that they would be able to increase the sales price of the radio from $ 290 to $ 310 Viper sells 45 radios per month. If Viper decides to further process the radio, monthly operating income wouldarrow_forward
- Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 What is target cost per unit to achieve the desired profit? a. RO 24 per unit b. RO 25 per unit c. RO 22 per unit d. RO 20 per unitarrow_forwardAdorable Face is considering a new line of lipstick products. They would like to know if it will pay off. Estimated fixed costs are $250,000, and the manufacturing, materials, shipping and packaging cost (variable cost) per lipstick is $1.00. If they sell 80,000 lipsticks, what price should they charge (maintaining the $100,000 target profit and $200,000 advertising budget)?arrow_forwardCompany has started producing and selling drones to consumers. their goal was to optimize their process. Given that the drone production has factory costs of $17, 500, a design cost of $18, 500, and an additional total variable cost of $(5.0Q^ 2+4.7Q-48) in labor and parts. They plan on selling each unit at $900. If the goal is to minimize average cost, how many drones should they sell? Round your answer the nearest whole unitarrow_forward
- Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for all sprinklers by an average of $0.70. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 490.000 sprinkler units at an average unit selling price of $28.60. The manufacturing costs are $7,866,260 variable and $2.011,486 fixed. Selling and administrative costs are $2,644.240 variable and $809,370 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to O decimal places, e.g. 5X and net income answers to 2 decimal places, e.g. 5,275.25.) Contribution margin ratio Net income Current New % Effect Decrease Increase eTextbook and Media Save for Later Attempts: unlimited Submit Answerarrow_forwardSuccess Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 What is the desired profit per unit? a. RO 6 per unit b. RO 10 per unit c. RO 5 per unit d. RO 15 per unitarrow_forwardSparkle, Inc., sells customized accessories. Currently, it sells 10, 000 sparkly phone cases annually at an average price of $55 a case. It is considering adding a lower -priced (less sparkly) line of phone cases, which sell for $29 a pair. Sparkle, Inc., estimates it can sell 5,000 of the lower-priced cases but will sell 1,000 less of the higher-priced cases by doing so. What is the dollar amount of sales that should be used when evaluating the addition of the lower-priced phone cases?arrow_forward
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