1. For many years, Leno Corporation has used a straightforward cost-plus pricing system, marking its goods up approximately 25 percent of total cost. The company has been profitable; however, it has recently lost considerable business to foreign competitors that have become very aggressive in the marketplace. These firms appear to be using target costing.

An example of Leno’s problem is typified by item no. 8976, which has the following unit-cost characteristics:

The going market price for an identical product of comparable quality is $610, which is significantly below what Leno is charging.

-What is Leno’s current selling price of item no. 8976?

-If Leno used target costing for item no. 8976, what must happen to costs if the company desires to meet the market price and maintain its current rate of profit on sales? By how much?

-Suppose that by previous cost-cutting drives, costs had already been “pared to the bone” on item no. 8976. What might Leno be forced to do with its markup on cost to remain competitive? By how much?

-iTRUE OR FALSE) in many industries, prices are the result of an interaction between market forces and costs.

2. The following data pertain to Lawn Master Corporation’s top-of-the-line lawn mower.

To achieve a target price of $516 per lawn mower, the markup percentage is 12.1 percent on total unit cost.

Required:

1. What is the fixed selling and administrative cost allocated to each unit of Lawn Master’s top-of-the-line mower? (Do not round your intermediate computations. Round your final answer to the nearest dollar amount.)
2. For each of the following cost bases, develop a cost-plus pricing formula that will result in a target price of $516 per mower: (Round your percentage answers to 2 decimal places (i.e., .1234 should be entered as 12.34).)

Sleep Tight, Inc., manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $36,000, $32,000, and $28,000, respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $42,000, $36,000, and $23,000, respectively. Direct materials purchases were $555,000, direct labor was $219,000 for the year, and factory overhead was $140,000.

Prepare a cost of goods sold budget for Sleep Tight, Inc.

7. Product Cost Method of Product Costing

Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 4,620 cell phones are as follows:

Voice Com desires a profit equal to a 15% rate of return on invested assets of $598,200.

a. Determine the amount of desired profit from the production and sale of 4,620 cell phones.
$

b. Determine the product cost per unit for the production of 4,620 of cell phones. Round your answer to the nearest whole dollar.
$ per unit

c. Determine the product cost markup percentage for cell phones. Round your answer to two decimal places.
%

d. Determine the selling price of cell phones. Round your answers to the nearest whole dollar.

Product Cost Method of Product Costing

Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,320 cell phones are as follows:

Voice Com desires a profit equal to a 15% rate of return on invested assets of $601,500.

a. Determine the amount of desired profit from the production and sale of 5,320 cell phones.
$

b. Determine the product cost per unit for the production of 5,320 of cell phones. Round your answer to the nearest whole dollar.
$ per unit

c. Determine the product cost markup percentage for cell phones. Round your answer to two decimal places.
%

d. Determine the selling price of cell phones. Round your answers to the nearest whole dollar.

Sleep Tight manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $39,000, $33,000 and $25,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $41,000, $38,000 and $21,000 respectively. Direct material purchases were $575,000. Direct labor was $231,000 for the year. Factory overhead was $159,000.

Prepare a cost of goods sold budget for Sleep Tight, Inc.

Sleep Tight, Inc. manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $40,000, $31,000 and $28,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $42,000, $33,000 and $22,000 respectively. Direct materials purchases were $570,000. Direct labor was $241,000 for the year. Factory overhead was $151,000.

Prepare a cost of goods sold budget for Sleep Tight, Inc.

1. (a) A micro-entrepreneur produces caps and hats for women. The output-cost data of the business is reproduced below:

TC = 944.29 - 2.24Q + 0.02Q²

Using the above estimated total cost equation determine the average and marginal cost functions. Determine the output rate that will minimize average cost and the per-unit cost at that rate of output. The current market price of caps and hats per unit is Tk. 6.00 and is expected to remain at that level for the foreseeable future. Should the firm continue its production?

(b) Using the following cost data how would you estimate your short run supply curve. If there are 100 firms in the industry, would be the industry supply? [ Hint. Think about the relationship between MC and AVC and find the output supply of a single a firm]

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 15,500 Indirect labor 135,000 Property taxes, factory 8,500 Utilities, factory 75,000 Depreciation, factory 230,700 Insurance, factory 10,500 Total actual manufacturing overhead costs incurred $ 475,200 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 405,000 Direct labor cost $ 65,000 Inventories: Raw materials, beginning $ 20,500 Raw materials, ending $ 30,500 Work in process, beginning $ 40,500 Work in process, ending $ 70,500 The company uses a predetermined overhead rate of $24 per machine-hour to apply overhead cost to jobs. A total of 20,200 machine-hours were used during the year.

Required: 1. Compute the amount of underapplied or overapplied overhead cost for the year.

2. Prepare a schedule of cost of goods manufactured for the year.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Compute the amount of underapplied or overapplied overhead cost for the year.

Jacquie Inc. reports the following annual cost data for its single product.

Complete the below table using absorption costing. (Round cost per unit answers to 2 decimal places.)

Sleep Tight, Inc. manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $37,000, $32,000 and $29,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $41,000, $38,000 and $19,000 respectively. Direct materials purchases were $575,000. Direct labor was $233,000 for the year. Factory overhead was $154,000.

Prepare a cost of goods sold budget for Sleep Tight, Inc.