Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at
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Question:
Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for QC's standard three-foot chair due to aggressive pricing by competitors. QC's chairs sold for $650 whereas the competition's comparable chair was selling for $570. Winters determined that a price drop to $570 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.
Cost data based on sales of 10,000 chairs:
Budgeted Quantity | Actual Quantity | Actual Cost | |||||||
Direct materials (board feet) | 88,500 | 80,000 | $ | 1,252,500 | |||||
Direct labor (hours) | 71,600 | 74,025 | 875,500 | ||||||
Machine hours (hours) | 11,650 | 11,500 | 250,500 | ||||||
Finishing and packing (hours) | 6,750 | 6,650 | 125,500 | ||||||
If the profit per unit is maintained, the target cost per unit is:
Multiple Choice
$81.
$171.
$181.
$276.
$226.
Related Book For
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
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