The management of Comfort Ltd are exploring the potential to add a new product to their...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The management of Comfort Ltd are exploring the potential to add a new product to their range of office equipment. Whilst Comfort Ltd already manufactures computer stands, they are considering the introduction of a premium portable computer stand to capture some of the increased market demand for such products. Market research has identified that the maximum selling price the market would be prepared to bear is £800. This research has identified customer requirement and the Hard and Soft value functions and these are presented in the table below. The total of the Hard and Soft value functions were weighted at 70%:30% respectively Description % Weighting Projected actual cost £ Hard Durability 20 55 Flexibility 25 80 Weight 40 140 Stability 15 30 Graphics/Design 35 52 20 25 Shape Image 45 63 Comfort Ltd require a profit margin of 45% a) Calculate the target cost and value index for each of the hard and soft functions identifying where Comfort Ltd should concentrate its cost reduction efforts and value enhancement efforts. b) Critically explain how target costing can be used to support cost reduction and/or value enhancement strategy of an organisation. In your answer, draw attention to value engineering and cost driver analysis. Soft The management of Comfort Ltd are exploring the potential to add a new product to their range of office equipment. Whilst Comfort Ltd already manufactures computer stands, they are considering the introduction of a premium portable computer stand to capture some of the increased market demand for such products. Market research has identified that the maximum selling price the market would be prepared to bear is £800. This research has identified customer requirement and the Hard and Soft value functions and these are presented in the table below. The total of the Hard and Soft value functions were weighted at 70%:30% respectively Description % Weighting Projected actual cost £ Hard Durability 20 55 Flexibility 25 80 Weight 40 140 Stability 15 30 Graphics/Design 35 52 20 25 Shape Image 45 63 Comfort Ltd require a profit margin of 45% a) Calculate the target cost and value index for each of the hard and soft functions identifying where Comfort Ltd should concentrate its cost reduction efforts and value enhancement efforts. b) Critically explain how target costing can be used to support cost reduction and/or value enhancement strategy of an organisation. In your answer, draw attention to value engineering and cost driver analysis. Soft
Expert Answer:
Answer rating: 100% (QA)
Statement showing Target cost Particulars weights Target cost Actual cost Difference Target selling price 80000 Less target profit margin 45 of 800 po... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
Students also viewed these accounting questions
-
Comfort Footwear Inc. is considering whether to add a new line of running shoes to be sold to its retail customers. To produce these shoes, special machines costing a total of $131,040 must be...
-
The Walt Disney Company is planning to add a new rollercoaster to its park in Anaheim, California. The cost to purchase and build this rollercoaster will be $12,000,000 and will cost $80,000 in...
-
If you want the formulas and any calculations, select the corresponding cell and press F2 (Function Key on key board), It will show all calculations and formulas Automatically Question Elite Company...
-
Describe two methods for determining the molecular mass of a polypeptide. Which is more accurate and why?
-
The post-closing trial balance as of December 31, 2009 and the adjusted trial balance as of December 31, 2010 are shown here for the Heinz Company: A review of the accounting records reveals the...
-
Use Mark Gilley's FlashCard statement. There is an error in his bill. The average daily balance, finance charge, available credit, and new balance amounts are not filled in. You can find a copy of...
-
We are extracting acetic acid from water into 3 -heptanol at \(25^{\circ} \mathrm{C}\) in an extraction column with 30 equilibrium stages. Equilibrium is \(y=0.828\) \(\mathrm{x}\), where...
-
Sawyer Company was formed on December 1, 2013. The following information is available from Sawyers inventory records for Product BAP. A physical inventory on March 31, 2014, shows 3,200 units on...
-
BASIC ANNUITIES AND APPLICATIONS I.Find the present and future value of $1000 received every month end for 20 years if the interest rate is J12 = 12% p.a. II.Find the present value of $10,000...
-
Castergourd Home Products makes two types of butcher-block tables: the Beefeater and the Deutschlander. The two tables are made in the same facility and require the same amount of labor and...
-
Processing real data TS on US monthly CPI index. Clean up the data and create the TS plot. How to use R to solve this?
-
As part of a quality-assurance program being initiated by Community Hospital, each vice president personally interviewed every staff member under his or her jurisdiction to determine what actions...
-
Reinforced concrete is a popular building material used in Singapore's built environment. It is commonly used in all local developments, buildings, and infrastructure, for the construction of their...
-
out2. Consider the following truth table for a circuit with inputs a, b, and c and outputs out1 and a atata 0 0 0 0 b cout1 out2 SO 0 ol 1 1 1 0 0 1 0 1 1 1 1 1 0 oto 0 1 1 0 0 1 0 1 0 1 1 0 0 1 0 1...
-
This week we will be utilizing technology in more depth to complete our assignment. I need an idea for a PowerPoint presentation which will either propose a CHANGE an Internet policy, OR propose a...
-
You are a lead IT auditor conducting an assessment of a mid - sized financial institution\'s IT governance framework. During your review, you discover that the organization has recently implemented...
-
A team of three decides to split up project work. One month later they meet. Two went in separate directions, while the other misunderstood his part's objective. Is there a barrier to team...
-
Cable Corporation is 60% owned by Anna and 40% owned by Jim, who are unrelated. It has noncash assets, which it sells to an unrelated purchaser for $100,000 in cash and $900,000 in installment...
-
Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labour-hours (DMLH) per suit. Data pertaining to fixed manufacturing overhead costs for June...
-
Manufacturing companies participating in a supply-chain initiative linking manufacturers and retailers recently made the following comments on the benefits of the initiative: Receiving better...
-
Whengon Manufacturing makes elec tronic hearing aids. Department A manufactures 10,000 units of part HR-7 and Department B uses this part to make the finished product. HR-7 is a specific part for a...
-
Southern Aurora Limited (SAL) is a large Sydney-based financial institution that operates internationally. It has also established strategic alliances with a number of financial institutions based in...
-
You are the manager of internal audit for the Department of Transport, which is a major government department within your state. You have an internal audit staff of five professionals. Two are senior...
-
You are the manager of internal audit for a large Australian city council. The council is responsible for all the normal services-for example, water, sewerage, roads, waste disposal, parklands, and...
Study smarter with the SolutionInn App