Target Costing

Laser Cast, Inc., manufactures color laser printers. Model J20 presently sells for $525 and has a total product cost of $420, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $500 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas:

1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $11 per unit.
3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 42% of the factory overhead are related to running injection molding machines.

The direct labor rate is $34 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

The Blandings Home Construction Company purchased a new crane for $350,000 this year. It sold the old crane for $50,000. At the time it had a net book value of $20,000. Assume any profit on the sale of old equipment is taxed at 21%. These were the only transactions that affected investing activities this year. Construct the Cash Flow from Investing Activities section of the statement of cash flows to concisely convey the maximum information to readers of the company's financial statements. Use a minus sign, to indicate any decreases in cash or cash outflows.

1. Darth Vader has taken over the hiring of workers at the construction of the Death Star. When the hourly wage of a worker is 30 Republic Credits (RC 30), he’s willing to hire 100 workers. When the wage increases to 35 Republic Credits, he decides to hire 60 workers.

1. What is the own-wage elasticity of demand for workers? Is it elastic or inelastic?

2. What are two reasons that the elasticity you found might be elastic or inelastic? Reference 2 Hicks-Marshall laws of derived demand.

A construction company in Naples, Florida, is struggling to sell condominiums. In order to attract buyers, the company has made numerous price reductions and better financing offers. Although condominiums were once listed for $350,000, the company believes that it will be able to get an average sale price of $245,000. Let the price of these condominiums in the next quarter be normally distributed with a standard deviation of $16,000.

a. What is the probability that the condominium will sell at a price (i) below $234,000?, (ii) above $271,000? (Round final answers to 4 decimal places.)

b. The company is also trying to sell an artist’s condo. Potential buyers will find the unusual features of this condo either pleasing or objectionable. The manager expects the average sale price of this condo to be the same as others at $245,000, but with a higher standard deviation of $22,000. What is the probability that this condo will sell at a price (i) Below $234,000?, (ii) Above $271,000? (Round your answers to 4 decimal places.)

Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2020, the general ledger for Case Inc. contains the following data.

Subsidiary data for Work in Process Inventory on June 1 are as follows.

During June, raw materials purchased on account were $4,700, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $900 and miscellaneous costs of $400 incurred on account.

A summary of materials requisition slips and time tickets for June shows the following.

Overhead was charged to jobs at the same rate of $1.25 per dollar of direct labor cost. The patios for customers Rodgers, Stevens, and Linton were completed during June and sold for a total of $19,900. Each customer paid in full.

Journalize the June transactions: (1) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead costs incurred; (2) assignment of direct materials, labor, and overhead to production; and (3) completion of jobs and sale of goods. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

You are the construction manager of a company that build standard shopping centres across the world. You meet a supplier who promises you material that allows builders to build significantly quicker than what the existing material allows, without compromising the quality, safety etc of the structures. The CEo asks you to assess during the year and give a report at the end of the year with a recommendation of whether to buy the new material or not. You take a sample of projects from around the world and use new materials from some and old materials from others. This is the information gathered:

Use the p value method to determine if the suppliers claim is valid to decide whether to continue using the existing material or adopt the new method post the 1 year of experimentation.

1) Decision criteria

Ho

H1

You need to perform a _____ tailed test

2) Assumption:

3) Degrees of freedom

4) Choice of distribution and motivation

5) Test statistic (show formula and all workings)

6) P-value (all workings and analysis of p-value)

7) Decision

8) Interpretation and conclusion

9) what would your decison be if

p-value < x

p-value > x

A construction company is purchasing a new Tractor for over the road use. The IRS classifies this as 3-year property. The truck costs $347000.
a) Determine the depreciation allowance for each year using SLN method.

b) Determine the depreciation allowance for each year using DDB method.

c) Determine the depreciation allowance for each year using MACRS.

d) Using a 10% MARR calculate the present worth of the depreciation for each of the 3 methods above.