Chapter 13

Number 6: (only need the three incorrect boxes)

Williams Incorporated produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The rm calculates the price using a variety of pricing methods and then chooses the nal price based on that information and other strategic information. A summary of the key cost information follows. Williams expects to manufacture and sell 53,500 parts in the coming year. While the demand for Williams's part has been growing in the past 2 years, management is not only aware of the cyclical nature of the automobile industry, but also concerned about market share and profits during the industry's current downturn. Total. Costs Variable manufacturing 5 4,673,000 Variable selling and administrative 848,650 Facilitylevel fixed overhead 2,338,875 Fixed selling and administrative 668,495 Batchlevel fixed overhead 353,000 Total investment in product line 22,343,000 Expected sales (units) 53,500 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Determine the price for the part using a markup of 31% of full manufacturing cost. (Do not round intermediate calculations. Round your answer to 4 decimal places.) _$ 180.3400 6 per unit Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Determine the total contribution margin and total operating profit for each of the methods in requirements 1 through 5. (Do not round intermediate calculations.) Markup on full manufacturing cost $ 4,126,336 9 765,966 a Markup on life cycle costs $ 5,492,055 9 2,131,685 9 Price to achieve desired GM % $ 7,629,913 9 4,269,543 0 Price to achieve desired LCC % $ 6,645,501 0 3,235,131 0 Price to achieve desired ROA of 13% $ 6,264,960 3 2,904,590 a Required information [The following information applies to the questions displayed Dale W.] UR Safe Systems installs home security systems. Two of its systems, the ICU 100 and the ICU 900, have these characteristics: Design Specifications ICU 10% ICU 900 Cost Data Video cameras 3 1 $ 116/ea Video monitors 3 3 $ 28/ea Motion detectors 5 5 $ 20/ea Floodlights 1 6 $ 8/ea Alarms 2 2 $ 15/ea Wiring 710 feet 1,110 feet $ ELI/feet Installation 15 hour 27 hour $ 13/hour The ICU 100 sells for $920 installed, and the ICU 900 sells for $1,630 installed. Required: 1. What are the current gross profit margin percentages on both systems? 2. UR Safe's management believes that it must drop the price on the ICU 100 to $860 and on the ICU 900 to $1,500 to remain competitive in the market. Recalculate gross profit margin percentages for both products at these price levels and then compute the target cost needed for each product to maintain the current gross prot margin percentages (For all requirements, round your percentage answers to 2 decimal places (Le. .1234 = 12.34%) and other answers to the nearest whole dollar amount.) whole dollar amount.) 6 Answer is complete but not entirely correct. __-_- -__-- Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The rm reports the following operating data for the yearjust completed: Quantity of Cost Cost per Unit of Cost Activity Cost Driver Driver Driver Purchasing Number of purchase orders 1,110 $161 per order Warehousing Number of moves 8,000 30 per move Distributing Number of shipments 610 91 per shipment Caldwell buys 101,100 units at an average unit cost of $10 and sells them at an average unit price of $20. The rm also has xed operating costs of $251,100 for the year. Caldwell's customers are demanding a 10% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 2% discount. Required: Caldwell has estimated that it can reduce the number of purchase orders to 790 and can decrease the cost of each shipment by $14 with minor changes in its operations. Any further cost savings must come from reengineering the warehousing processes. What is the maximum cost (i.e., target cost) for warehousing if the rm desires to earn the same amount of prot next year