King Bathroom Fixtures (KBF) makes faucets, basins, and so on primarily for home use and sold...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
King Bathroom Fixtures (KBF) makes faucets, basins, and so on primarily for home use and sold through major retail chains. The design team at KBF has been working on a unique design to provide reasonable pressure while still conserving water. The market is quite competitive and KBF analysts believe that the fixture could sell for a unit price of $42.40. The cost accounting team at KBF has estimated the following manufacturing costs for the new design. Direct materials Direct labor Manufacturing overhead Total $ 21.25 6.50 9.75 $ 37.50 An operating profit of 12 percent of manufacturing costs is required for all new products at KBF without the explicit consent of the top executive team. At KBF, operating margin is defined as revenues less manufacturing costs, all divided by manufacturing costs). Required: a. Suppose KBF uses cost-plus pricing, setting the price equal to manufacturing costs plus 12 percent of manufacturing costs. What price should it charge for the fixture? b. Suppose KBF uses target costing. What is the highest acceptable manufacturing cost at which KBF would be willing to produce the fixture? King Bathroom Fixtures (KBF) makes faucets, basins, and so on primarily for home use and sold through major retail chains. The design team at KBF has been working on a unique design to provide reasonable pressure while still conserving water. The market is quite competitive and KBF analysts believe that the fixture could sell for a unit price of $42.40. The cost accounting team at KBF has estimated the following manufacturing costs for the new design. Direct materials Direct labor Manufacturing overhead Total $ 21.25 6.50 9.75 $ 37.50 An operating profit of 12 percent of manufacturing costs is required for all new products at KBF without the explicit consent of the top executive team. At KBF, operating margin is defined as revenues less manufacturing costs, all divided by manufacturing costs). Required: a. Suppose KBF uses cost-plus pricing, setting the price equal to manufacturing costs plus 12 percent of manufacturing costs. What price should it charge for the fixture? b. Suppose KBF uses target costing. What is the highest acceptable manufacturing cost at which KBF would be willing to produce the fixture?
Expert Answer:
Answer rating: 100% (QA)
a CostPlus Pricing Costplus pricing involves adding a markup to the manufacturing cost of a product ... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these accounting questions
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Read the case study and answer the question below with a one page response. What does a SWOT analysis reveal about the overall attractiveness of Under Armours situation? Founded in 1996 by former...
-
Which of the theoretical approaches are the most useful in explaining your organisations current IHRM policies and practices?
-
The Gallup Organization contacts 1028 teenagers who are 13 to 17 years of age and live in the United States and asks whether or not they had been prescribed medications for any mental disorders, such...
-
On Monday mornings, a CIBC branch has only one teller window open for deposits and withdrawals. Experience has shown that the average number of arriving customers in a 4-minute interval on Monday...
-
Classify (determine the type of) the following PDEs of second order: = 0, (x2 1) +2024 = 25x3 - 1) 25(x-1) + + = cos(5t).
-
Linton Company purchased a delivery truck for $34,000 on January 1, 2015. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life...
-
The trial balance of A, B, and D at December 31, 2021 after all adjustments have been made is as follows: Adjusted Balances Account Title Debit Credit Cash 83,000 Other Assets 80,000 Accounts...
-
You are working on a free-form Packet Tracer challenge activity as seen in Figure 1, you have been given the London Railways network.' The purpose of this EMA question is to build upon each of the...
-
4. Draw the enantiomer and both diastereomers for each compound. If there is not an enantiomer or diastereomer, write NONE in the appropriate box. Then answer the following questions. a. b. Br CI...
-
Jurvin Enterprises is a manufacturing company that had no beginning inventories. A subset of the transactions that it recorded during a recent month is shown below. a. $76,600 in raw materials were...
-
The directions of all vectors and magnitudes of Vectors A, B, C, and E are shown in Figure P3.59. Using this information, complete parts a and b. a 70 B = 100 A = 125 Scale: 0 30% C = 50 50 45 D F...
-
DBS Bank is launching a new investment product targeting senior citizens in Asia. The company decides to use direct marketing for selling the product. 1. What direct marketing strategy would allow...
-
Activity-Based Costing, Unit Cost, Ending Work-in-Process Inventory Salazar Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Salazar identified three...
-
Explain the role of marketing in the sustainability context. Bullet point and explain and provide academic references
-
On December 31, Jarden Company's Allowance for Doubtful Accounts has an unadjusted credit balance of $15,000. Jarden prepares a schedule of its December 31 accounts receivable by age Accounts...
-
Reread the discussion leading to the result given in (7). Does the matrix sI - A always have an inverse? Discuss.
-
Flight Training Corporation is a privately held firm that provides fighter pilot training under contracts with the U.S. Air Force and the U.S. Navy. The firm owns approximately 100 Lear jets that it...
-
Eli Lilly and Company produces pharmaceutical products for humans and animals. Exhibit 7.18 includes a footnote excerpt from the annual report of Lilly for the period ending December 31, 2004....
-
Refer to Problem 8.25 for Stebbins Corporation for Year 1, its first year of operations. Exhibit 8.31 shows the amounts for the Canadian subsidiary for Year 2. The average exchange rate during Year 2...
-
Break financial statement fraud schemes into 10 types.
-
Give some examples where companies use biased assumption? What is meant by "wildcatting?"
-
What are the three ways managers override internal controls? How can a forensic accountant overcome managers overriding internal controls?
Study smarter with the SolutionInn App