2)Torres Inc. recently began production of a new product, the halogen light, which required the investment of $600,000 in assets. The costs of producing and selling 10,000 halogen lights are estimated as follows:

Variable costs per unit: Fixed costs:

Direct materials $32 Factory overhead $180,000

Direct labor 12 S & A expenses 60,000

Factory overhead 8

S & A Expenses 7

Total variable he costs/unit $59

Torres is considering a selling price for the halogen light. Management has decided to use the cost-plus approach to product pricing and has indicated that the product must earn 10 % return on invested assets.

Instructions:

1.Determine the amount of desired profit from the production and sale of the halogen light

2.Assuming that the total cost method is used, determine A) the cost amount per unit, B) the

markup percentage (rounded to two decimal places), and C) the selling price, rounded to nearest dollar.

3.Assuming that the product cost method is used, determine A) the cost amount per unit, B) the

markup percentage (rounded to two decimal places), and C) the selling price, rounded to nearest dollar.

4.Assuming that the variable cost method is used, determine A) the cost amount per unit, B) the markup percentage (rounded to two decimal places), and the selling price. Round markup to the nearest dollar.

Next Question:

3)Buenavista Publications is considering two new magazine products. The estimated net cash flows from each product is as follows: Year Sounds Pro Choice 1 $65,000 $70,000 60,000 55,000 w N 25,000 35,000 4 25,000 30,000 5 45,000 30,000 Total 220,000 220,000 Each product requires an investment of $125,000. A rate of 10% has been selected for the net present value analysis. Instructions 1. Compute the following for each product: A. Cash payback period B The net present value. Use the present value of 1 table, appearing in the chapter Exhibit 2, Appendix A of the book, or in the internet 2. Prepare a report to management on the relative merits of each of the new products