Target Costing
2. Jared Monsma, Weekend Golfer's vice president for marketing, has concluded from his marketing analysis that the sales for the standard golf cart have been dwindling because of aggressive pricing by competitors. Weekend Golfer sells these golf carts online for $3,000, whereas the competition sells a comparable cart online in the $2,800 range. Jared has determined that dropping the price to $2,850 would regain the firm's annual market share of 8,000 golf carts. Cost data based on sales of 8,000 gas-operated golf carts follow:
| Direct materials | Budgeted Amount $4,200,000 | Actual Amount | Actual Cost $4,500,000 |
| Direct labor | 100,000 hrs. | 125,000 hrs. | 1,750,000 |
| Machine setups | 75,000 hrs. | 75,000 hrs. | 750,000 |
| Mechanical assembly | 375,000 hrs. | 400,000 hrs. | 5,000,000 |
Required:
a) Calculate the current cost and profit per unit.
b) How much of the current cost per unit is attributable to non-value-added activities?
c) Calculate the new target cost per unit for a sales price of $2,850 if the profit per unit is maintained.
d) What strategy do you suggest for Weekend Golver to attain the target cost calculated in requirement 3?
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Ramada Company produces one golf cart model. A partially complete table of company costs follows: Required...
Ramada Company produces one golf cart model. A partially complete table of company costs follows: Required 1. Complete the table. (Round your Cost per Unit answers to 2 decimal places.) Number of Golf Carts Produced and Sold 600 Units 800 Units 1000 Units Total costs Variable costs $ 400,000 Fixed costs per year 250,000 Total costs 0$650,000 S Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit 0.00 $ 0.00 S 0.00 2. Ramada...
Target Profit Beard Company sells a product for $15 per unit. The variable cost is 10...
Target Profit Beard Company sells a product for $15 per unit. The variable cost is 10 per unit, and fixed costs are 1,750,000. Determine (a) the break-even point in sales units and (b) the sales units required for the company to achieve a target profit of $400,000. a. Break-even point in sales units units b. Break-even point in sales units required for the company to achieve a target profit of $400,000 units
Normal No Spacing Heading 1 Heading 2 Ramada Company produces one golf cart model. A partially...
Normal No Spacing Heading 1 Heading 2 Ramada Company produces one golf cart model. A partially complete table of company costs follows: 400 600 800 $ Number of golf carts produced and sold Total costs Variable costs Fixed costs per year Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $ 384,000 144,000 528,000 Required: 1. Complete the table. 2. Ramada sells its carts for $1,600 each. Prepare a contribution margin income...
I keep coming up with 111.36??? choices are: 22 112 122 217 167 I get 638.64...
I keep coming up with 111.36???
choices are:
22
112
122
217
167
I get 638.64 for-profit per unit. Selling price-cost per
unit
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Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing...
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...
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Target Profit Beard Company sells a product for $15 per unit. The variable cost is 10 per unit, and fixed costs are 1,750,000. Determine (a) the break-even point in sales units and (b) the sales units required for the company to achieve a target profit of $400,000. a. Break-even point in sales units units b. Break-even point in sales units required for the company to achieve a target profit of $400,000 units
Normal No Spacing Heading 1 Heading 2 Ramada Company produces one golf cart model. A partially complete table of company costs follows: 400 600 800 $ Number of golf carts produced and sold Total costs Variable costs Fixed costs per year Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $ 384,000 144,000 528,000 Required: 1. Complete the table. 2. Ramada sells its carts for $1,600 each. Prepare a contribution margin income...
I keep coming up with 111.36???
choices are:
22
112
122
217
167
I get 638.64 for-profit per unit. Selling price-cost per
unit
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 $890 whereas the competition's comparable chair was selling for $750. Winters determined that a price drop...
Target Profit Ramirez Inc. sells a product for $80 per unit. The variable cost is $60 per unit, and fixed costs are $2,000,000 Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $250,000 a. Break-even point in sales units units b. Break-even point in sales units of the company desires a target profit of $250,000 units
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