Question
In: Accounting
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows:
|
1 |
Variable costs per unit: |
|
|
2 |
Direct materials |
$122.00 |
|
3 |
Direct labor |
29.00 |
|
4 |
Factory overhead |
52.00 |
|
5 |
Selling and administrative expenses |
35.00 |
|
6 |
Total variable cost per unit |
$238.00 |
|
7 |
Fixed costs: |
|
|
8 |
Factory overhead |
$247,000.00 |
|
9 |
Selling and administrative expenses |
149,000.00 |
Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 10% return on invested assets.
| Required: | |||||||
| 1. | Determine the amount of desired profit from the production and sale of flat panel displays. | ||||||
| 2. | Assuming that the product cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays.* | ||||||
| 3. | (Appendix) Assuming that the total cost method is used, determine (a) the cost amount per unit, (b) the markup percentage and (c) the selling price of flat panel displays.* | ||||||
| 4. | (Appendix) Assuming that the variable cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays.* | ||||||
| 5. | Comment on any additional considerations that could influence establishing the selling price for flat panel displays. | ||||||
| 6. | Assume that as of August 1, 3,000 units of flat panel displays
have been produced and sold during the current year. Analysis of
the domestic market indicates that 2,000 additional units are
expected to be sold during the remainder of the year at the normal
product price determined under the product cost method. On August
3, Crystal Displays Inc. received an offer from Maple Leaf Visual
Inc. for 600 units of flat panel displays at $224 each. Maple Leaf
Visual Inc. will market the units in Canada under its own brand
name, and no variable selling and administrative expenses
associated with the sale will be incurred by Crystal Displays Inc.
The additional business is not expected to affect the domestic
sales of flat panel displays, and the additional units could be
produced using existing factory, selling, and administrative
capacity.
|
| Labels | |
| Cash flows from operating activities | |
| Costs | |
| Amount Descriptions | |
| Cash payments for merchandise | |
| Cash received from customers | |
| Fixed manufacturing costs | |
| Income (loss) | |
| Revenues | |
| Variable manufacturing costs |
1. Determine the amount of desired profit from the production and sale of flat panel displays.
2. Assuming that the product cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays. Round your markup percentage and selling price to two decimal places.
| Cost amount per unit | |
| Markup percentage | % |
| Selling price |
3. (Appendix) Assuming that the total cost method is used, determine (a) the cost amount per unit, (b) the markup percentage, and (c) the selling price of flat panel displays. Round your markup percentage and selling price to two decimal places.
6a. Prepare a differential analysis of the proposed sale to Maple Leaf Visual Inc. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter “0”. A colon (:) will automatically appear if required.
|
Differential Analysis |
|
Reject (Alternative 1) or Accept (Alternative 2) Order |
|
August 3 |
|
1 |
Reject Order |
Accept Order |
Differential Effect on Income |
|
|
2 |
(Alternative 1) |
(Alternative 2) |
(Alternative 2) |
|
|
3 |
||||
|
4 |
||||
|
5 |
||||
|
6 |
Solutions
Expert Solution
Refer to the below images for the above mentioned questions in a detailed way of solution with explanation and calculations.
ekkarill92 answered 8 months agoRelated Solutions
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the...
Crystal Displays Inc. recently began production of a new
product, flat panel displays, which required the investment of
$1,600,000 in assets. The costs of producing and selling 5,000
units of flat panel displays are estimated as follows: 1 Variable
costs per unit: 2 Direct materials $122.00 3 Direct labor 32.00 4
Factory overhead 48.00 5 Selling and administrative expenses 34.00
6 Total variable cost per unit $236.00 7 Fixed costs: 8 Factory
overhead $247,000.00 9 Selling and administrative expenses
146,000.00...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the...
Crystal Displays Inc. recently began production of a new
product, flat panel displays, which required the investment of
$1,300,000 in assets. The costs of producing and selling 5,000
units of flat panel displays are estimated as follows:
1
Variable costs per unit:
2
Direct materials
$120.00
3
Direct labor
32.00
4
Factory overhead
48.00
5
Selling and administrative expenses
36.00
6
Total variable cost per unit
$236.00
7
Fixed costs:
8
Factory overhead
$254,000.00
9
Selling and administrative expenses
146,000.00...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the...
Crystal Displays Inc. recently began production of a new
product, flat panel displays, which required the investment of
$1,300,000 in assets. The costs of producing and selling 5,000
units of flat panel displays are estimated as follows:
1
Variable costs per unit:
2
Direct materials
$119.00
3
Direct labor
31.00
4
Factory overhead
49.00
5
Selling and administrative expenses
36.00
6
Total variable cost per unit
$235.00
7
Fixed costs:
8
Factory overhead
$248,000.00
9
Selling and administrative expenses
150,000.00...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the...
Crystal Displays Inc. recently began production of a new
product, flat panel displays, which required the investment of
$1,300,000 in assets. The costs of producing and selling 5,000
units of flat panel displays are estimated as follows:
1
Variable costs per unit:
2
Direct materials
$120.00
3
Direct labor
32.00
4
Factory overhead
48.00
5
Selling and administrative expenses
36.00
6
Total variable cost per unit
$236.00
7
Fixed costs:
8
Factory overhead
$254,000.00
9
Selling and administrative expenses
146,000.00...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the...
Crystal Displays Inc. recently began production of a new
product, flat panel displays, which required the investment of
$1,600,000 in assets. The costs of producing and selling 5,000
units of flat panel displays are estimated as follows:
1
Variable costs per unit:
2
Direct materials
$118.00
3
Direct labor
30.00
4
Factory overhead
50.00
5
Selling and administrative expenses
34.00
6
Total variable cost per unit
$232.00
7
Fixed costs:
8
Factory overhead
$254,000.00
9
Selling and administrative expenses
149,000.00...
Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the...
Crystal Displays Inc. recently began production of a new
product, flat panel displays, which required the investment of
$1,500,000 in assets. The costs of producing and selling 5,000
units of flat panel displays are estimated as follows:
1
Variable costs per unit:
2
Direct materials
$119.00
3
Direct labor
32.00
4
Factory overhead
52.00
5
Selling and administrative expenses
36.00
6
Total variable cost per unit
$239.00
7
Fixed costs:
8
Factory overhead
$245,000.00
9
Selling and administrative expenses
147,000.00...
A new technology for the production of liquid-crystal displays (LCD) is being mastered. 8,000,000 pixels are...
A new technology for the production of liquid-crystal displays
(LCD) is being mastered. 8,000,000 pixels are located on the LCD.
The LCD is defective if there are more than 5 malfunctioning
pixels. Let denote the number of defective pixels observed on the
LCD. Of 3,000 LCD inspected, the following data were observed for
the values of :
Values
1 or less
2
3
4
5
6
7
8 or more
Observed
frequency
146
255
401
552
545
422
306
373...
Assume that as of August 1, 3,000 units of flat panel displays have been produced and...
Assume that as of August 1, 3,000 units of flat panel
displays have been produced and sold during the current year.
Analysis of the domestic market indicates that 2,000 additional
units are expected to be sold during the remainder of the year at
the normal product price determined under the product cost method.
On August 3, Crystal Displays Inc. received an offer from Maple
Leaf Visual Inc. for 600 units of flat panel displays at $226 each.
Maple Leaf Visual...
Harrod Fashions began production of a new product on June 1. The company uses a standard...
Harrod Fashions began production of a new product on June 1.
The company uses a standard cost system and has established the
standards indicated in Table 1 for the new product.
Table 1
Std. quantity or hours
Std. price or rate
Standard cost
Direct materials
2.2 yds
$18 per yd
$39.60
Direct labor
2.6 hrs
10 per hr
26.00
During June, the following activity was
recorded relative to the new product:
Purchased 10,000 yards of material at a total...
1. Harrod Fashions began production of a new product on June 1. The company uses a...
1. Harrod Fashions began production of a new product on June 1.
The company uses a standard cost system and has established the
standards indicated in Table 1 for the new product.Table 1Std.
quantity or hoursStd. price or rateStandard costDirect materials2.2
yds$18 per yd$39.60Direct labor2.6 hrs10 per hr26.00 During June,
the following activity was recorded relative to the new product:a.
Purchased 10,000 yards of material at a total cost of $172,000.b.
Produced 3,000 new units of product during the month....
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