KM Clark Industries makes tennis balls. Its only plant can produce as many as 2,100,000 cans...

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KM Clark Industries makes tennis balls. Its only plant can produce as many as 2,100,000 cans of tennis balls per year. Current production is 1,600,000 cans. Annual manufacturing, selling, and administrative fixed costs total $494,000. The variable cost of making and selling each can of tennis balls is $0.50. Stockholders expect a 18% annual return on the company's $3,300,000 of assets. Read the requirements. Requirement 1. What is KM Clark's current full product cost of making and selling 1,600,000 cans of tennis balls? What is the current full unit product cost of each can of tennis balls? (Round the per unit cost to the nearest cent.) Plus: Total full product costs Divided by the Full product cost per can Requirements 1. What is KM Clark's current full product cost of making and selling 1,600,000 cans of tennis balls? What is the current full unit product cost of each can of tennis balls? 2. Assume KM Clark is a price-taker, and the current market price is $1.05 per can of tennis balls (the price at which manufacturers sell to retailers). What is the target full product cost of producing and selling 1,600,000 cans of tennis balls? Given KM Clark's current costs, will the company reach the stockholders' profit goals? 3. If KM Clark cannot change its fixed costs, what is the target variable cost per can of tennis balls? 4. Suppose KM Clark could spend an extra $50,000 on advertising to differentiate its product so that it could be a price-setter. Assuming the original volume and costs, plus the $50,000 of new advertising costs, what cost-plus price will KM Clark want to charge for a can of tennis balls? 5. Dean, Inc. has just asked KM Clark to supply the company with 350,000 cans of tennis balls at a special order price of $0.80 per can. Dean wants KM Clark to package the tennis balls under the Dean label (KM Clark will imprint the Dean logo on each tennis ball and can). KM Clark will have to spend $25,000 to change the packaging machinery. Assuming the original volume and costs, should KM Clark accept this special order? (Assume KM Clark will incur variable selling costs as well as variable manufacturing costs related to this order.) KM Clark Industries makes tennis balls. Its only plant can produce as many as 2,100,000 cans of tennis balls per year. Current production is 1,600,000 cans. Annual manufacturing, selling, and administrative fixed costs total $494,000. The variable cost of making and selling each can of tennis balls is $0.50. Stockholders expect a 18% annual return on the company's $3,300,000 of assets. Read the requirements. Requirement 1. What is KM Clark's current full product cost of making and selling 1,600,000 cans of tennis balls? What is the current full unit product cost of each can of tennis balls? (Round the per unit cost to the nearest cent.) Plus: Total full product costs Divided by the Full product cost per can Requirements 1. What is KM Clark's current full product cost of making and selling 1,600,000 cans of tennis balls? What is the current full unit product cost of each can of tennis balls? 2. Assume KM Clark is a price-taker, and the current market price is $1.05 per can of tennis balls (the price at which manufacturers sell to retailers). What is the target full product cost of producing and selling 1,600,000 cans of tennis balls? Given KM Clark's current costs, will the company reach the stockholders' profit goals? 3. If KM Clark cannot change its fixed costs, what is the target variable cost per can of tennis balls? 4. Suppose KM Clark could spend an extra $50,000 on advertising to differentiate its product so that it could be a price-setter. Assuming the original volume and costs, plus the $50,000 of new advertising costs, what cost-plus price will KM Clark want to charge for a can of tennis balls? 5. Dean, Inc. has just asked KM Clark to supply the company with 350,000 cans of tennis balls at a special order price of $0.80 per can. Dean wants KM Clark to package the tennis balls under the Dean label (KM Clark will imprint the Dean logo on each tennis ball and can). KM Clark will have to spend $25,000 to change the packaging machinery. Assuming the original volume and costs, should KM Clark accept this special order? (Assume KM Clark will incur variable selling costs as well as variable manufacturing costs related to this order.)

Answer rating: 100% (QA)

1 Current Full Product Cost Total Variable Cost Variable Cost per can Number of cans produced Total ... View the full answer