1. Presto Laser is involved in producing and selling high-end golf equipment. The company has recently been involved in developing various types of laser guns to measure yardages on the golf course. One small laser gun, called LittleLaser, appears to have a very large potential market. Because of competition, Presto Laser does not believe that it can charge more than $90 for LittleLaser. At this price, Presto Laser believes it can sell 100,000 of these laser guns. LittleLaser will require an investment of $9,000,000 to manufacture, and the company wants an ROI of 20%.

Instructions

Determine the target cost for one LittleLaser.

2.

Carlton Corporation makes a commercial-grade cooking griddle. The following information is available for Carlton Corporations anticipated annual volume of 30,000 units.

Per Unit Total

Direct materials $20

Direct labor $10

Variable manufacturing overhead $11

Fixed manufacturing overhead $540,000

Variable selling and administrative expenses $ 4

Fixed selling and administrative expenses $180,000

The company uses a 30% markup percentage on total cost.

Instructions

(a) Compute the total cost per unit.

(b) Compute the target selling price.

3.

Patrick Custom Electronics (PCE) sells and installs complete security, computer, audio, and video systems for homes. On newly constructed homes it provides bids using time-and- material pricing. The following budgeted cost data are available.

Material

Time Loading

Charges Charges

Technicians wages and benefits $150,000

Parts managers salary and benefits $30,000

Office employees salary and benefits 30,000 13,400

Other overhead 15,000 31,000

Total budgeted costs $195,000 $74,400

The company has budgeted for 6,000 hours of technician time during the coming year. It desires a $30 profit margin per hour of labor and an 80% profit on parts. It estimates the total invoice cost of parts and materials in 2017 will be $620,000.

Instructions

(a) Compute the rate charged per hour of labor. (Round to two decimal places.)

(b) Compute the material loading percentage. (Round to two decimal places.)

(c) PCE has just received a request for a bid from Brock Casey on a $1,200,000 new home.

The company estimates that it would require 80 hours of labor and $40,000 of parts.

Compute the total estimated bill.