C Home | Chegg.com x C Get Homework Help With Chegg X C Ed Vetz & Company specializes ir X + + C chegg.com/homework-help/managerial-accounting-9th-edition-chapter-12-problem-1P-solution-9780538742801 = Chegg Study Textbook Solutions Expert Q&A Practice Mew Searc = Chapter 12, Problem 1P Bookmark Show all steps: ON Ed Vetz & Company specializes in the assembly of home appliances. One division focuses most of its efforts on assembling a standard toaster oven. Projected costs of this product are as follows: Cost Description Budgeted Costs Toaster casings $ 960,000 Electrical components 2,244,000 Direct labor 3,648,000 Variable indirect assembly costs 780,000 Fixed indirect assembly costs 1,740,000 Selling expenses 1,536,000 General operating expenses 840,000 Administrative expenses 816,000 The projected costs are based on an estimated demand of 600,000 toaster ovens peryear. The company wants to make a $1,260,000 profit. Competitors have just published their wholesale prices for the coming year. They range from $21.60 to $22.64 per oven. The Vetz toaster oven is known for its high quality and modern look It competes with products at the top end of the price range. Even with its reputation, however, every $.20 increase above the top competitor's price causes a drop in demand of 60,000 units below the original estimate. Assume that all price changes are in $.20 increments. Required 1. Prepare a schedule of total projected costs and unit costs. 2. Use gross margin pricing to compute the anticipated selling price. 3. Based on competitors' prices, what should the Vetz toaster sell for (assume a constant unit cost)? Defend your answer. (Hint: Determine the total profit at various sales levels.) 4. Would your pricing structure in requirement 3 change if the company had only limited competition at its quality level? If so, in what direction? Explain why. C Home | Chegg.com x C Get Homework Help With Chegg X C Ed Vetz & Company specializes ir X + + C chegg.com/homework-help/managerial-accounting-9th-edition-chapter-12-problem-1P-solution-9780538742801 = Chegg Study Textbook Solutions Expert Q&A Practice Mew Searc = Chapter 12, Problem 1P Bookmark Show all steps: ON Ed Vetz & Company specializes in the assembly of home appliances. One division focuses most of its efforts on assembling a standard toaster oven. Projected costs of this product are as follows: Cost Description Budgeted Costs Toaster casings $ 960,000 Electrical components 2,244,000 Direct labor 3,648,000 Variable indirect assembly costs 780,000 Fixed indirect assembly costs 1,740,000 Selling expenses 1,536,000 General operating expenses 840,000 Administrative expenses 816,000 The projected costs are based on an estimated demand of 600,000 toaster ovens peryear. The company wants to make a $1,260,000 profit. Competitors have just published their wholesale prices for the coming year. They range from $21.60 to $22.64 per oven. The Vetz toaster oven is known for its high quality and modern look It competes with products at the top end of the price range. Even with its reputation, however, every $.20 increase above the top competitor's price causes a drop in demand of 60,000 units below the original estimate. Assume that all price changes are in $.20 increments. Required 1. Prepare a schedule of total projected costs and unit costs. 2. Use gross margin pricing to compute the anticipated selling price. 3. Based on competitors' prices, what should the Vetz toaster sell for (assume a constant unit cost)? Defend your answer. (Hint: Determine the total profit at various sales levels.) 4. Would your pricing structure in requirement 3 change if the company had only limited competition at its quality level? If so, in what direction? Explain why
