Brief exercises chp 9 Flashcards
Podrive co manufactures computer hard drives. the market for hard drives is very competitive. the current market price for a computer hard drive is $45. podrive would like a profit of $14 per drive. how can pdorive compay accomplisth this?
$31 keep costs at $31
Gruner cop produces snowboards. the following cost information per unit is available; direct materials $24 direct labour $16 vmoh 12, fmoh 28; v selland admin 8, f sell and admin 24. using a 15% mp on the total cost per unit, calculate the target selling price
Direct materials …………………………………………………………………………… $24
Direct labour ……………………………………………………………………………….. 16
Variable manufacturing overhead…………………………………………………. 12
Fixed manufacturing overhead …………………………………………………….. 28
Variable selling and administrative expenses………………………………… 8
Fixed selling and administrative expenses …………………………………….
Total unit cost ………………………………………………………………………. $112
24
Target selling price: $112 + (0.15 × $112) = $128.80
Travis co produces high-performance rotors. it expects to produce 100,000 rotors in the coming year. it has invested $15 mill to produce the rotors. the company has a required return on investment of 20%. WHAT IS ITS ROI per unit?
ROI per unit = (0.20 × $15,000,000) ÷ 100,000 units = $30.00
Schuman cop poduces microwave units. the following per unit cost information is avialalbe; direct materials $36; direct labour $24; vMOH 18, fmoh 42Vsell and admin 14 and fixed sell and admin 28, its desired roi per unit is $30. cacluatle its markup percentage using total cost approach
b. calculate the MP using absorption cost approach
c. What would the MP using variable cost approach
The mark-up percentage would be: $30 = 18.52% $36 + $24 + $18 + $42 + $14 + $28
The markup percentage using the absorption-cost approach is calculated by including only manufacturing costs in the cost base. Therefore, all costs related to selling and administration are excluded from the cost base and must be covered by the markup. Markup percentage = $30 + ($14 + $28) = 60% $36 + $24 + $18 + $42
Markup percentage
= $30 + ($42 + $28) =
108.7%
$36 + $24 + $18 + $14
During the current year, B corp expect to produce 10,000 units and has budgeted the following; net income $300,000; VC $1.1 MILL, FC $100,000. it has invested assets of 1.5 mill. what was the company’s budget ROI? what was its budgeted MP using total cost approach?
The mark-up percentage is equal to desired ROI per unit divided by total unit cost.
Desired ROI per unit = ($300,000 ÷ 10,000) = $30
Total unit cost = ($1,100,000 + $100,000) ÷ 10,000 = $120
The mark-up percentage = $30 ÷ $120 = 25%
Swayze small engine repair charges $75 per hour of loabur. it has a material loading percentage of 60%. ON A RECENT JOb to replace the engine of a riding lawnmower, Swayze worked 5 hours and used parts with a cost of $400. calculate the total bill
Swayze’s total bill would equal:
(5 hours × $75) + $400 + ($400 × 60%) = $1,015
The Machine division of ITA international as a capacity of 2,000 units. its sales and cost data are: SP $80 VMC 25 VS&A 5 total fixed MOH 200,000
the machine division is currently selling 1,800 units to outside customers and the assembly division of ita international wants to produce 400 units from machingin. if the transaction takes place, the V sell csots per unit on th eunits transferred to assembly will be $0/ unit, and not $5/unit . what should be the transfer price in order not to affect the machining divisions current profit
With a capacity of 2,000 units, the machining division would have to reduce its external sales by 200 units. The minimum transfer price on these units is equal to the division’s variable cost plus its opportunity cost—in this case the contribution margin on the units that could not be sold externally. The balance of the units could be sold for variable cost, as there is no opportunity cost. The minimum transfer price for the four hundred units would be a weighted average of both prices, as follows:
Minimum transfer price = [($25 × 400) + (($80 – $30) × 200)] ÷ 400 = $50
The Machine division of ITA international as a capacity of 2,000 units. its sales and cost data are: SP $80 VMC 25 VS&A 5 total fixed MOH 200,000
the machine division is currently selling 1,800 units to outside customers and the assembly division of ita international wants to produce 400 units from machingin. if the transaction takes place, the V sell csots per unit on th eunits transferred to assembly will be $0/ unit, and not $5/unit . what should be the transfer price in order not to affect the machining divisions current profit ?
if the assembly division is currently buying form an outside supplier at $75 per unit, wat will be the affect on onverall company profits if internal sales for 400 units takes place at optimium transfer price?
what if the units being requested are special high performance units, and that the division’s vc would be $24 per unit. what is the minimum transfer price that the heating dept. should accept
Minimum transfer price = [($25 × 400) + (($80 – $30) × 200)] ÷ 400 = $50
The company profits would increase by the difference between what the assembly division pays externally, and what they would pay the machining division:
(400 units × $75) – (400 units × $50) = $10,000
The minimum transfer price is equal to the division’s variable cost plus its opportunity cost. In this case the minimum transfer price is:
Minimum transfer price = [($24 × 400) + (($80 – $30) × 200)] ÷ 400 = $49
