Linwood Company recently began production of a new navigation device, which required a capital investment of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Linwood Company recently began production of a new navigation device, which required a capital investment of $660,000. Linwood is currently considering establishing a selling price for this new device that will ensure a 25% return on the capital investment. The engineering and the sales department compiled the following estimates for producing and selling 77,000 devices: Direct Materials Direct Labor Variable Manufacturing Overhead Selling and Administrative Expenses Fixed Manufacturing Overhead General and Administrative Expenses Required: Per Unit Total (77,000 units) $12 $26 $14 $17 $223,000 $73,000 a) Using the cost plus pricing method, dalculate the markup percentage. b) The company has a cost plus pricing policy that uses the absorption (full) cost as the cost base and the markup percentage calculated in part a). How much would the company charge for its new navigation device? c) Based on a recent consumer report, the company predicts that its device cannot be priced higher than $63. At this particular price, the company believes it can sell 85,000 units and assumes the fixed costs will remain the same. Using the target costing method, calculate the total target cost and the total manufacturing cost based on 85,000 units Linwood Company recently began production of a new navigation device, which required a capital investment of $660,000. Linwood is currently considering establishing a selling price for this new device that will ensure a 25% return on the capital investment. The engineering and the sales department compiled the following estimates for producing and selling 77,000 devices: Direct Materials Direct Labor Variable Manufacturing Overhead Selling and Administrative Expenses Fixed Manufacturing Overhead General and Administrative Expenses Required: Per Unit Total (77,000 units) $12 $26 $14 $17 $223,000 $73,000 a) Using the cost plus pricing method, dalculate the markup percentage. b) The company has a cost plus pricing policy that uses the absorption (full) cost as the cost base and the markup percentage calculated in part a). How much would the company charge for its new navigation device? c) Based on a recent consumer report, the company predicts that its device cannot be priced higher than $63. At this particular price, the company believes it can sell 85,000 units and assumes the fixed costs will remain the same. Using the target costing method, calculate the total target cost and the total manufacturing cost based on 85,000 units
Expert Answer:
Answer rating: 100% (QA)
a Using the cost plus pricing method we need to calculate the total cost per unit including all direct and indirect costs and then add the desired mar... View the full answer
Related Book For
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
Posted Date:
Students also viewed these accounting questions
-
Night Watch Company recently began production of a new product, the halogen light, which required the investment of $500,000 in assets. The costs of producing and selling 12,000 halogen lights are...
-
Night Watch Company recently began production of a new product, the halogen light, which required the investment of $500,000 in assets. The costs of producing and selling 12,000 halogen lights are...
-
Stay Glow Company recently began production of a new product, the halogen light, which required the investment of $1,000,000 in assets. The costs of producing and selling 18,000 halogen lights are...
-
The S&P portfolio pays a dividend yield of 1% annually. Its current value is 1,300. The T-bill rate is 4%. Suppose the S&P futures price for delivery in 1 year is 1,330. Construct an arbitrage...
-
In the position shown, bar DE has a constant angular velocity of 15 rad/s clockwise. Determine (a) The distance b for which the velocity of point F is vertical, (b) The corresponding velocity of...
-
Does the center of pressure change with airspeed and AoA?
-
How to establish the terms of the attorney-client agreement?
-
Aberdeen Computer Corp. (ACC) is located in Aberdeen, Washington. The company has developed the Web-Surfer, a low-cost e-mail and Web-surfing appliance. This product is manufactured at four plants,...
-
Josef exchanged land ( tax basis of $ 3 4 , 0 0 0 ) , that he had held for 4 years as an investment, for similar land valued at $ 4 2 , 0 0 0 which was owned by Adrian. In connection with this...
-
You are reviewing audit work papers containing a narrative description of the Tenney Corporations factory payroll sys-tem. A portion of the narrative is as follows: Factory employees punch time clock...
-
The two primary factors that affect interest rates on debt securities are Risk and Inflation. Explain the role of each factor in terms of capital decisions made in a healthcare organization.
-
Identify some of the basic issues managers must confront when attempting to motivate employees in different cultures.
-
Assume that you are leading a team composed of representatives from British, Mexican, Brazilian, and Egyptian subsidiaries of your firm. The team must make several major decisions. a. What guidelines...
-
The number of files on a computer In Exercises 1524, determine whether the data described are qualitative or quantitative.
-
In a case-control study, the outcome has occurred before the subjects are sampled. In Exercises 1116, determine whether the statement is true or false. If the statement is false, rewrite it as a true...
-
In a cross-sectional study, measurements are made at only one point in time. In Exercises 1116, determine whether the statement is true or false. If the statement is false, rewrite it as a true...
-
Big Bad Home Fries, Inc. (BBHF has just been sued for a norovirus incident that caused food poisoning at one of its restaurants. The plaintiff is suing for $500,000 and BBHF believes the range of...
-
Is it ethical to provide safety training in English to immigrant workers who speak little English, in order to reduce costs?
-
For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance...
-
Would a zero-coupon bond ever sell for its face amount?
-
During November, Taylor Company incurred factory overhead costs as follows: indirect materials, $6,500; indirect labor, $8,000; utilities cost, $3,500; and depreciation, $2,800. Journalize the entry...
-
A semicircular trough of corrugated steel, with diameter \(D=1 \mathrm{~m}\), carries water at depth \(y=0.25 \mathrm{~m}\). The slope is 0.01 . Find the discharge.
-
For a sharp-crested suppressed weir of length \(B=8.0 \mathrm{ft}\), \(P=2.0 \mathrm{ft}\), and \(H=1.0 \mathrm{ft}\), determine the discharge over the weir. Neglect the velocity of approach head.
-
A rectangular sharp-crested weir with end contractions is \(1.5 \mathrm{~m}\) long. How high should the weir crest be placed in a channel to maintain an upstream depth of \(2.5 \mathrm{~m}\) for...
Study smarter with the SolutionInn App