$ 15,990,000 $ 16,635,000 Required: 1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculat Round your answer to 2 decimal places.) Target cost
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- MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high- powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large, powerful outboards. The part sells for $690, and sales volume averages 30,500 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $616. The market is very competitive, and MaxiDrive realizes it must meet the new price or lose significant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the most recent year for MaxiDrive's production of 30,500 units: Direct materials Direct labor Indirect labor Inspection (hours and cost) 1,140 Materials handling (number of purchases and cost) Machine setups (number and cost) 5,150 775,000 4,000 1,950 1,025,000…Hair Zone manufactures a brand of hair-styling gel. It is considering adding a modified version of the product – a foam that provides stronger hold. Hair Zone’s variable costs and prices to wholesalers are: Hair Zone expects to sell 1 million units of the new styling foam in the first year after introduction, but it expects that 60 per cent of those sales will come from buyers whonormally purchase Hair Zone’s styling gel. Hair Zone estimates that it would sell 1.5 million units of the gel if it did not introduce the foam. If the fixed cost of launching the new foam will be €100,000 during the first year, should Hair Zone add the new product to its line? Why or why not?TwoShaft Inc. manufactures a wide variety of parts for recreational boating, including boat engines. The component is purchased by OEM (Original Equipment Manufacturers) such as Mercury and Honda, for use in the larger and more powerful outboards. The units sell for $960, and sales volume averages 33,500 units per year. Recently, TwoShaft's major competitor lowered the price of the equivalent part to $740. The market was very competitive, and TwoShaft realized it had to meet the new price or lose significant market share. The controller assembled the following data for the most recent year: Cost and Usage for Production of 33,500 Units Standard Cost Actual Quantity Actual Cost Materials $ 6,671,000 $ 7,151,000 Direct labor 2,287,000 2,191,000 Indirect labor 3,279,000 3,087,000 Inspection (hours) 4,100 553,500 Materials handling (number of purchases) 73,750 402,250 Machine setups…
- ElegantWood is a manufacturer of modern style furniture and accessories. It considers two online suppliers to purchase its main raw material wood. Both online suppliers provide a similar price and shipping rate. Their service levels and lead times are also similar. However, they have a quite different charging structures. The first online supplier charges 5 percent commission on the market price of wood while the second online supplier requires a subscription fee of $10 million as an up-front payment for a 2-year period. The second online supplier also charges a commission of 1 percent on the market price of wood. Even though ElegantWood spends about $150 million on the purchase of wood each year, this amount varies depending on utilization. Production manager thinks that the next year's utilization will potentially be high and keep the wood spending at $150 million level. However, he also predicts that there is a 25 percent chance that the spending will drop by 10 percent. For the…Bostonian Inc. has a number of divisions, including the Delta Division and the Listen Now Division. The Listen Now Division owns and operates a line of MP3 players. Each year, the Listen Now Division purchases component AZ in order to manufacture the MP3 players. Currently, it purchases this component from an outside supplier for $6.50 per component. The manager of the Delta Division has approached the manager of the Listen Now Division about selling component AZ to the Listen Now Division. The full product cost of component AZ is $3.10. The Delta Division can sell all of the component AZs it makes to outside companies for $6.50. The Listen Now Division needs 18,000 component AZs per year; the Delta Division can make up to 60,000 components per year. Required: A. Which division sets the maximum transfer price? Which division sets the minimum transfer price? Maximum Minimum B. Suppose the company policy is that all transfer take place at full cost. What is the transfer…Sid's Skins makes a variety of covers for electronic organizers and portable music players. The company's designers have discovered a market for a new clear plastic covering with college logos for a popular music player. Market research indicates that a cover like this would sell well in the market priced at $21.50. Sid's desires an operating profit of 25 percent of costs. Required: What is the highest acceptable manufacturing cost for which Sid's would be willing to produce the cover? (Round your answer to 2 decimal places.)
- Sid's Skins makes a variety of covers for electronic organizers and portable music players. The company's designers have discovered a market for a new clear plastic covering with college logos for a popular music player. Market research indicates that a cover like this would sell well in the market priced at $22,00. Sid's desires an operating profit of 25 percent of costs. Required: What is the highest acceptable manufacturing cost for which Sid's would be willing to produce the cover? (Round your answer to 2 decimal places.) Highest acceptable manufacturing costs ________Bigdeal Corporation manufactures paper and paper products and istrying to decide whether to purchase Smalltek Company. Smalltek has developed a process for manufacturing boxes that can replace containers that use fluorocarbons for expelling a liquid product. The price may be as high as $45 million. Bigdeal prefers to buy Smalltek and integrate its products while leaving the Smalltek management in charge of day-to-dayoperations. A major consideration is the efficiency and effectiveness of Smalltek’s operations. Bigdeal wants to obtain a report on the operational efficiency and effectiveness of the Smalltek sales, production, and research and development departments.Required:Who can Bigdeal engage to produce the report resulting from this operational audit? Several possibilities exist. Are there any particular advantages or disadvantages in choosing from among them?Townsend Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Townsend produces a relatively small amount (15,000 units) of the cream and is considering the purchase of the product from an outside supplier for $9 each. If Townsend purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Townsend's accountant constructed the following profitability analysis. Revenue (15,000 units x $20) Unit-level materials costs (15,000 units x $2.50) Unit-level labor costs (15,000 units x $1.80) Unit-level overhead costs (15,000 × $0.70) Unit-level selling expenses (15,000 × $1.00) Contribution margin Skin cream production supervisor's salary Allocated portion of facility-level costs Product-level advertising cost $300,000 (37,500) (27,000) (10,500) (15,000) 210,000 ( 75,000) ( 45,000) (50,000) $ 40,000 Contribution to company-wide income Required a. Identify the cost items…
- Scrooge McDuck Safe Limited is considering buying the hinges it uses in the manufacture of vaults from an outside vendor. Currently, Scrooge McDuck Safe Limited makes the hinges in its own manufacturing facility. Scrooge McDuck Safe Limited can buy the hinges for $1.50 each. The company uses 900,000 hinges each year. Fixed cost for Scrooge McDuck Safe Limited would not change if the company stopped making the hinges. Information about Scrooge McDuck Safe Limited's cost to manufacture the 900,000 casters follows: Per Unit $.50 .10 Total Direct material $450,000 90,000 360,000 225.000 $1,125,000 Direct labor Variable overhead Fixed overhead Total .40 25 $1.25 Required: A. Prepare a relevant cost schedule that indicates whether Scrooge McDuck Safe Limited should buy the hinges or continue to make them. B. If Scrooge purchased the hinges, management has approached you that a dial producer wishes to rent the vacant space for $150,000 to produce their dials. Does this change your decision??…Sid's Skins makes a variety of covers for electronic organizers and portable music players. The company's designers have discovered a market for a new clear plastic covering with college logos for a popular music player. Market research indicates that a cover like this would sell well in the market priced at $17.00. Sid's desires an operating profit of 25 percent of costs. Required: What is the highest acceptable manufacturing cost for which Sid's would be willing to produce the cover?ElegantWood is a manufacturer of modern style furniture and accessories. It considers two online suppliers to purchase its main material wood. Both online suppliers provide a similar price and shipping rate. Their service levels and lead times are also similar. However, they have a quite different charging structures. The first online supplier charges 5 percent commission on the market price of wood while the second online supplier requires a subscription fee of $10 million as an up-front payment for a 2-year period. The second online supplier also charges a commission of1 percent on the market price of wood. Even though ElegantWood spends about $150 million on the purchase of wood each year, this amount varies depending on utilization. Production manager thinks that the next year's utilization will potentially be high and keep the wood spending at $150 million level. However, he also predicts that there is a 25 percent chance that the spending will drop by 10 percent. For the second…